Bits Bucket For April 7, 2010
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… yeah, this pretty much hits the nail on the head :
http://americathegrimtruth.wordpress.com/2010/04/05/america-the-grim-truth/
Interesting essay. I haven’t been to many of the places he suggests bugging out to, but I would live in Ottawa or Toronto.
On the other hand, I dunno, sounds like this guy thinks people in Germany aren’t using prozac.
Ottawa and Toronto, both in Ontario which has a higher provincial debt per capita than California.
“higher provincial debt per capita”
I have never used that criteria when deciding where to live.
..I know this because I am an American, and I escaped from the prison you call home…
The USA is a prison with neither bars nor locks. My advice for anyone who agrees with that article is don’t let the door smack you in the ass on your way out.
But we’re not totally lacking in compassion. Call if you require assistance… money for a plane ticket.. whatever.
US notches world’s highest incarceration rate Christian Science Monitor 2003
More than 5.6 million Americans are in prison (2003) or have served time there, according to a new report by the Justice Department released Sunday. That’s 1 in 37 adults living in the United States, the highest incarceration level in the world.
The prison population has quadrupled since 1980.
(the) prison experience will be a part of the lives of more and more Americans. By 2010, the number of American residents in prison or with prison experience is expected to jump to 7.7 million, or 3.4 percent of all adults
US prison population at all time high trews . org
The “war on terror” is endlessly peddled by the American political establishment as a crusade for freedom and liberty around the world. Yet, as the latest prison figures again demonstrate, far from representing freedom, justice and democracy, the United States is notorious for its propensity to jail its own population.
The US incarcerates a far higher percentage of its population than any other country, with its prison population accounting for fully a quarter of the world’s prisoners
The crumbling of industry, education, healthcare and drug rehabilitation programs in America finds its consequences in all the social ills plaguing society’s poorest layers—unemployment, debt, despair, addiction, homelessness—and gives rise to domestic disturbances, theft, and property and drug crimes. The response of the ruling elite to these problems is more prisons.
Something near 30% of federal prison inmates are not US citizens. We can get right to work on our high incarceration rate by sending them back to whatever hell hole they came from.
Agree very much with that, Joey.
And almost ALL of them cannot read, write or speak English, even if they are born here.
We should take away weight exercise rooms and force prisoners to speak English.
Imagine if the test was to read the New York Times in front of a parole board and be able to discuss the issues…..
———————————————
More than 5.6 million Americans are in prison (2003) or have served time there,
We should take away weight exercise rooms and force prisoners to speak English.
Excellent idea. It would make ex-cons more employable and it would help re-unite America under our common language.
However the prison industrial complex (which is 4 times bigger than in 1980 and now partially privatized) has abandoned rehabilitation.
I wonder why.
You forget the three strikes you’re out rule, and a felony can be as little as stealing a 10 dollar pizza from 7-11 if you have no money in your pocket because that qualifies as premeditated. Whereas, if you had 10 on you it would not qualify as premeditated. Often the people in jail are of color and in there for pitily offences.
The USA is a prison with neither bars nor locks.
True, you don’t need an exit visa to leave, its getting into other countries with a work visa that’s tricky. Unlike our masters the PTBs in other countries actually look out for their citizens and jealously protect their good paying jobs.
Not like the brazen giant of Greek fame,
With conquering limbs astride from land to land;
Here at our sea-washed, sunset gates shall stand
A mighty woman with a torch, whose flame
Is the imprisoned lightning, and her name
Mother of Exiles. From her beacon-hand
Glows world-wide welcome; her mild eyes command
The air-bridged harbor that twin cities frame.
“Keep, ancient lands, your storied pomp!” cries she
With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tossed to me,
I lift my lamp beside the golden door!”
The doors of this prison swing both ways… love it or leave it. Where you go is your problem.
His piece would be more effective if he didn’t exaggerate everything. For instance, defense budget is about 50%, not 75% of federal spending.
I’ve lived overseas a good chunk of my adult life, and all countries have things that are good and bad. More vacation would be good, but that comes with lower salaries. So you have to give and take. Just moving someplace else doesn’t fix everything. Most will get homesick once the shine wears off the new ‘toy’.
But getting away for two or three years is like a vacation itself. And if there is a change and leadership in 3 years it would be worth coming back again.
Moving is stressful, more or less stress than being here, that is up to the individual.
Agreed. I’ve lived in Australia. While I loved it - the weather, the laid back population, the beauty of the place - it certainly isn’t a pradise where a taxi driver enjoys a standard of living better than a white-collar cube rat in the US. I’d live there in a heartbeat if I wasn’t convinced that Australia was as likely to have a massive, mind-numbing economic crash much like Ireland.
Another downside of being American overseas is that you are the face of America to them, and the locals never hesitate to give you a piece of their mind on what they think. America is in their news more than they are in ours, so they see what is going on, and come to you for an explanation. That part does get tiresome.
Speak the truth, Rusty! I’ve gotten a snootful of that sort of rhetoric from Canadians, Spaniards, and Mexicans. Not to mention members of my own family in Britain.
Another downside of being American overseas is that you are the face of America to them,
Totally. But for an American living in Brazil, Obama being elected took a heck of a lot of pressure off my shoulders and it changed overnight.
But I don’t even try to explain to them anymore how Obama’s not much different than Bush in his corporate leanings.
It just kills the buzz and accomplishes nothing. It’s better to keep them more or less liking Americans again.
Getting away for three years? Think of all the great Obama speeches you will miss.
They move me to tears. I can learn to love Big Brother.
I think this piece is talking about the direction the United States
is headed in if we stay the same course . God ,all you have to do is look at the stress around you and you can see that people are maxed out in every way . If the structures and systems aren’t producing happiness and goal obtainment for people than something is very wrong . I think about how President Eisenhower warned against a Military /Industrial takeover . If anybody thinks that the Politicians are creating well balanced systems by the policies and laws they enact these days ,your crazy . Its all about special interest and its not about promotion of general welfare ,so
your either a winner or a loser based on bribed peoples choices .
The rule of law is becoming meaningless and large fractions of the population are becoming increasing more desperate in one way or another trying to be functional in a insane World .
I think this piece is talking about the direction the United States is headed
I agree.
And I also don’t automatically discount entire messages just because they might contain hyperbole or some statistical errors.
Some posters called this piece Left Wing but I’m wondering if the Left is now the new Right on the issue of economic control.
For example:
1. The Right fights government control of the economy but now the corporations have taken over our government.
2. This piece argues for FREEDOM from corporate economic control.
Therefore, if the corporations are now the new government, isn’t this essay arguing against a type of government control of our economic lives and freedoms?
Therefore on this issue, isn’t the Left now the new Right?
And if the Left is now the new Right, does that mean that the Right is now the new Left because they condone our new government’s (the corporations’s) hammerlock control of our economic and social freedoms?
I think the right would somehow try to justify #1 by arguing that government’s expanding size and control needed to be scaled back so powerful corporations are exactly what was needed to reign it in.
His piece would be more effective if he didn’t exaggerate everything. For instance, defense budget is about 50%, not 75% of federal spending.
Not quite.
2009 expenditures: $3.54 Trillion
2009 defense: $796 Billion
22.5%
However he didn’t actually say that 70% (not 75%) of our spending goes to the Pentagon - he said 70% of our “tax dollars”, which is closer, but still way off - it’s 36.9%.
Nevertheless you’re right - it’s a stupid fluff piece, and obviously very subjective. And it’s old actually - I remember reading basically this same piece about 15 years ago. There are some good points made - I think the general jist of “we have less freedom than we think we have” is indeed true.
From Wikipedia. Total U.S. 2010 budget will be around $3.55 Trillion (that’s Trillion), which is also $3,550 Billion. Of that DOD, Veterans Affairs and Homeland Security together account for $760 Billion. That’s 22 percent, not 50.
Social Security, Medicare and Medicaid totals $1,438 Billion, about 40% of the total.
I used to live in Germany for many years back in the 70s & 80s during my high school years. During that time it was the magical mystery land of milk and honey. But times have changed. Salaries and benefits have been in relative decline for decades. It is true that Germany is still on a relatively stable footing as far as the economy and finances are concerned but the average working schmuck is paying the price.
A buddy of mine worked for VW for 25 years making good money, union contract and all. He got a buy out offer from VW for 180K Euro. He said he’d been working next to guys from the temp-agency that make 1/3 of what he makes. He took the cash ‘cos he knew his position would get outsourced to Eastern Europe within a few years anyway. The next day he got an offer from the VW temp-agency to continue working the same job, for 1/3 of his former salary.
Overall Germany is much less restrictive than the US. In the US we have laws governing every aspect of your live, drinking in public, swimming (nude) in public lakes, smoking weed, etc. If you get hurt, you can sue everybody for your own stupidity. In Germany/Europe they have more of a live and let live attitude.
Someone on CNN commenting on the Obama health plan had had children in three different countries and reported how completely different each experience was. She said in the “socialized” countries the doctors pushed much less testing and medication on the patient. She also said something I’ll never forget. She said in Europe people actually expect to eventually die (from old age). Not so in America.
No person has ever died of “old age”. There’s always some medical and/or physical (the line is sometimes gray) condition that causes death; be it pneumonia, cancer, acute liver disease, whatever. The question is whether or not someone chooses to, or can, have that condition treated.
I happen to live around a number of older people who don’t take drugs , You wouldn’t believe how active they are and one of the ladies is 90 years old . . The ones that I know that are on drugs are like the walking dead . I know that sometimes you have to take drugs to survive ( I know a 78 year old man that has been
taking insulin since he was 20 ),but so many of the drugs cause side effects .
A good lifestyle goes a long way toward keeping you healthy . Stress wears you out also . Look,the Corporate
Machine doesn’t care about people . It’s up to you to outsmart them and take care of yourself .I would rather spend more money on good food and need less because it’s actually nourishing my body . I’m at my exact right weight and I don’t have any medical conditions at my age . My neighbor next door who is 78 can outwork many younger dudes ,but he eats right and goes for long walks every day and his wife goes with him .
Not to say that medical science can’t be a good thing if you really need it ,but just think twice about what you cram down your pie hole and make sure you really need it .
Cause and effect, ur doin’ it rong. Hey, people who are healthy and active don’t ASK their doctors for help because they aren’t feeling well. So they don’t get prescribed drugs. I remember one of explaining one of those “estimating your life expectency” magazine quizes to somebody at work. It said that if you get more than 9 hours of sleep a night, you should subtract x years from your life expectancy. She was surprised that getting lots of sleep was bad for you. I explained that people who are bedridden and unhealthy get lots of sleep, not that sleep is “bad” for you.
“No person has ever died of “old age”.
Packman, as it’s been explained to me the immune system starts to fail as it begins to wear out (in advanced age) which can result in any of the above illnesses you stated above. It’s not to say old age is the only thing that affects the immune system only that it does eventually take it’s toll.
Yes true - guess the reason I was pointing that out is because it has a bearing on health care costs, and I think is a large part of the reason why costs are so high in the U.S. - for whatever reasons (some valid, some maybe not so) we want to spend more effort (and thus money) fighting these problems.
Not just immune systems, but other things as well, like bone structure. I venture (without looking at stats) for instance that the rate of doing extraordinary measures to overcome broken hips (e.g. hip replacements) is higher in the U.S. than most countries. Such things generally prolong life some, but they cost a ton.
She said in the “socialized” countries the doctors pushed much less testing and medication on the patient.
That’s one of the things that really galls me about the American system. You’ve already read my rants about the dental X-rays that are forever needing to be updated. And I’ll spare you the raving about all the test that I just have to have because I’m of a certain age. Ditto for the foot-stomping tantrum about the prescription meds that I don’t think that my mom needs but the doctor put her on anyway.
The next day he got an offer from the VW temp-agency to continue working the same job, for 1/3 of his former salary.
There’s a reason why most VW’s sold in the US are made in Mexico.
Capitalism has a conundrum it needs to solve: workers can’t afford to buy the consumer products they make.
I know we’re going off on a tangent, but - speaking as a VW owner who just put out $1,500 yesterday for an unexpected repair - one that probably would have cost well under $1k for most cars - don’t ever buy a VW.
Especially a Mexican VW. They’re still junk. The European ones are better.
Good point - and actually something I hadn’t thought to look for when I bought it, and wish I had.
And sure enough - from looking at my VIN - it was indeed made in Mexico. Nice.
Had a car made in Belgium once…It caught fire.
VW has been living off the rep built by the Beetle for 30 years.
They are as expensive to fix as a BMW or Mercedes Benz, but have none of the yuppie cachet. Think German Chevrolet.
And don’t even get me started on Audis……..
I was really tempted to buy a VW Golf last year. But after seeing the reliability ratings in CR (which were horrific, they made Chryslers look good) I passed.
I had old VW Rabbits, and they were great cars- reliable and cheap to fix when they did break. I’ve also had two recent VW Passats, both made in Germany, one in Wolfsburg (supposedly their premier plant) and I will say this- Never again will I own a VW. I don’t care where it’s made. Unreliable, difficult and expensive to fix. And our local dealer (who claims to win customer satisfaction awards) treats you like a piece of dung if your car wasn’t recently purchased or leased from him- ‘back of the line, chump’.
As Jah is my witness, never again. (Unless they start ‘making ‘em like they used to’.)
Bah. You look at germany and china. Both totally export driven economies.
The US overall is more self sustaining that Germany.
Interestingly Germany is probably the only major economy that has a favourable trade balance with China. Ditch the German consumer stuff - it is neither cheap nor reliable but when it comes to capital goods, machines, trains they can’t be beat.
When I took a month-long trip through Europe a few years ago - the difference in train systems in different countries was remarkable. German trains were very well built, and always ran on schedule. Italian trains were the opposite, with French somewhere in the middle.
The trains run on time…
Where have I heard that before?
I have actually worked on trains and train propulsion systems as a technician. The German equipment ( MAN, Siemens, AEG, Adtranz ) was very well designed and built, really bulletproof with extremely long MTBF and very enjoyable to work with. Everything else was awful.
As fo the 35 days of vacation in Germany that is correct.
But I tell you you need them, all 35 of them, because the climate is so awful you will spend all of them ‘travelling’ (escaping) to more hospitable areas: the Mediterranian in general, or any place that is warm enough.
At the beaches in Mallorca you meet the others, the British, the Scandinavians, all of them who try to escape the fridge for at least a couple weeks of the year, because otherwise they become depressed, drink or a just plain angry.
So, I moved from Germany to California, and since then I rarely feel the need of vacation, because here you live in a vacation climate.
Remember, rather live in a nice place with some shortcomings than freeze off you butt every single winter, which seem to last for ever, as already the Roman author Tacitus in his book ‘Germania’ observed. (1st century AD).
I used to travel to Mexico in my earlier days. Now, through the wonder of open borders, I no longer need to waste my money as Mexico has come here.
Boy I love this efficient new world we live in!
Did they bring Acapulco or Cancun with them?
Or is Huntington Beach the new Acapulco?
Speak for yourself. Some of us enjoy the northern climes. To me, there’s nothing more depressing than oppressive heat and endless sun, of which CA has more than it’s share.
Unlike that spiritually uplifting 50 below wind chill, and three feet of snow…..
Having lived in SoCal if found the “weather” to be highly overrated. Sure, it doesn’t snow, but that doesn’t mean it was a tropical paradise either. Plus it’s always hazy.
I agree with GB. Heat is no better than cold. LA sure doesn’t appeal to me. How many desert dwellers spend all day hiding in the A/C? It’s also funny to see someone complaining about the weather in Germany, which is fairly moderate.
That’s why I love living on the northern SF Peninsula. Just the right amount of sun, rain, wind, fog, heat and cold. Though sometimes I wish we had more coolness.
Don’t forget to burn your passport , do it all the way . No , this sort of feeder always keep their base safe , to come back to when ***** stuff happens . Bet he has a disability check or something every month post marked USA .
Yeah it was heavy on hyperbole. Reminds me of when a ugly/fat/crazy girl moved away and wrote back to us how popular she was at her new school. Yeah right.
I call B.S. It reads like it was written on a machine a la Orwell’s 1984. It’s a pseudo-leftist anti-globalist rant cobbled together to promote wordpress, is my guess. The author is lancefreeman76? Seriously? Really? Gee, anti-guns, anti-Fox news (with the NYT thrown in as a red herrring). I’ve read more convincing doggerel from real estate agents.
All of these statisctics are bull….just another Socialist trying to scare the American people into a larger centralized beauacracy. I just read a comparison on MSNBC yesterday which compared the workers and days off. We are very similar to most industrialized countries.
Do layoffs count as “days off”?
I just read a comparison on MSNBC yesterday which compared the workers and days off. We are very similar to most industrialized countries.
You gotta be kidding. Most people I know only get 2 weeks off per year. The only ones who get more are those:
with union jobs
who still are hanging on to their Fortune 500 jobs
who work for the gov’t
I get 3 weeks at my current job, but that also covers sick pay.
That’s rare. Most jobs give 2-3 weeks vacation out of college/HS, not including sick time. Most mid-level and senior people get 4-5 weeks of vacation.
If you work:
For a large company or the gov’t.
Most smaller employers are far less generous.
Depends more on the industry. The last 500-employee company I worked for offered 5 weeks of vacation after 10 years of service. Not bad for a relatively small company. It was in engineering.
I worked for a company in the 80’s (a less enlightened period). Vacation maxed at 2 weeks after 5 years. The owner ( a workaholic if there ever was one), said famously, “If we can get by without you for two weeks, we can get by without you forever”. I was there during the depths of the 80’s recession, and bailed as soon as the job market improved.
I’m also in engineering and I’m seeing lots of 2 week vacation packages being the standard for starting, bumping up to 3 weeks after 5 years.
I used to get 4 weeks at HP. I was getting 5 weeks for a while, but they cut it back to 4, saying that 4 was “competitive”. Of course YMMV.
This reduction of benefits is yet another facet of the “race to the bottom”.
I know of a job where you can get 30 days paid vacation in your first year, see the world, and be part of a great group of people.
Hmmm, I’ve heard of them — Army, Navy, Air Force, Marines, Coast Guard, and Merchant Marine.
Ding, Ding, Ding we have a winner. Arizona Slim come on down and claim your prize.
My 30 days paid vacation was a job in the U.S. Army.
My 30 days paid vacation was a job in the U.S. Army.
Just keep in mind that:
1. You earn it the hard way
2. A civilian thinks of 30 days of vacation as 6 weeks of vacation. Military leave includes weekends…30 days of leave is two 15-day vacations. On the plus side if you get along well with your chain of command you can get extra 3-4 day weekends once in a while (passes) without having to count them against your vacation (leave) time.
Overall I think the pay and benefits I received back in the day as a recent high school graduate were more than fair considering what I was bringing to the table. The quality of leadership, on the other hand, was totally unacceptable. Based on that experience I would never let my child enlist in the army if I could stop them.
The quality of leadership, on the other hand, was totally unacceptable. Based on that experience I would never let my child enlist in the army if I could stop them.
Reason #1 why my mother was opposed to my even speaking a few words to Army recruiters. And my father, who had been a Naval officer, didn’t disagree with her.
packman, please come down from the ivory tower.
In Texas, you get one week if you’re lucky. 2 weeks after X years (2-5) and nobody but the penthouse crowd gets more than that.
eco - sorry, but you need to quit your job and go to work somewhere else. That sucks, flat out.
Suggestion - get an engineering degree. I know plenty of engineers from Texas, and they all get way way better than that - even entry-level. For that matter all the other support people - admins etc. - get way better.
No - I’m not in an ivory tower - you’re either grossly exaggerating, or you have a horrible job.
In Texas, you get one week if you’re lucky. 2 weeks after X years (2-5) and nobody but the penthouse crowd gets more than that.
In Texas I got 2 weeks vacation right out of college…was up at 3 weeks when I left that company.
Went to a company that had 3 weeks PTO. Then to another that had 3 weeks PTO.
I think you’re exaggerating a little with your “one week” comment.
I think from his comment that he considers tech workers to be part of “the penthouse crowd”.
get 3 weeks at my current job, but that also covers sick pay.”
I worked over 15 jobs in my career in Electronics and this is very typical. Of course I never lasted much over 5 years so didn’t get the 3 weeks vacation.
3-4 weeks starting out ? must be in the FIRE economy
3-4 weeks starting out ? must be in the FIRE economy
Nope, not FIRE. My current employer is “generous” with PTO and Health Ins. No pension and 401k match is puny. Salary is average (less than what I was getting 10 years ago).
Colorado I remember visiting Agilent in Fort Collins in Oct
very nice place is it still there ? I was having a test rack made when I worked for CNXT cross point switch 2.5gb/s Agilent was building it for us, we were too busy. It was the 1990’s after all.
and 401k match is puny” yep RFMD took that away for awhile maybe its still gone? I left in 2009 moved to San Diego and new company gives company stock as a match 3% if I put in at least 6% oh boy
“Colorado I remember visiting Agilent in Fort Collins in Oct”
I think maybe you meant Loveland. There is no Agilent in Fort Collins anymore, they sold out that division to some private investors a few years ago and they renamed it Avago.
The Fort Collins campus is divided between HP and Avago these days. The Avago side looks like a ghost town and I suspect that they laid off most of the staff since they took over.
The HP side isn’t much better, I’d say maybe 60% occupancy. Lots of empty cubes in buildings 3 and 6, and some in buildinng 5 too. Of course this was last summer, before they cut me loose. I expect that its even worse now.
Similar is not same or not even close.
Oh so true.
IMO,
One should not limit themselves to thinking they are a citizen of one particular country. If you have a passport and the money you can go to Canada or Mexico every weekend to enjoy the freedoms that America does not have. And they can do likewise.
Things that you can be arrested for as felonies in the U.S. are perfectly legal in other countries. Your life can be ruined here when you do a victimless crime and get caught.
But that does not make me want to move out of the U.S. There are a lot of things that keep me wanting to be here. However it’s true that Australia, New Zealand, Ireland, and Canada have more economic freedoms than the U.S. and sometimes I think of just buying a townhouse in Vancouver, B.C. just for the weekends but keep my U.S. citizenship and work in Seattle.
“One should not limit themselves to thinking they are a citizen of one particular country.”
OMG, BiLA is one of them thar ‘…it takes a village, the UN is going to run the world” SOCIALISTS!!!!!!
Pack up the kids and the old ladies and head for the bunker in the hills!!!!!
You had better not let your employer hear you thinking like that. You might get your security clearance yanked, with terroristic talk like that.
. However it’s true that Australia, New Zealand, Ireland, and Canada have more economic freedoms than the U.S.
What does ‘economic freedom’ mean, Bill?
It seems to me that the countries you list would be considered wildly ’socialist’ by a libertarian like yourself. Nanny states. What makes them so economically free?
Canada’s top income tax rates are lower than the U.S. Canada is stronger in property rights than the U.S.
Australia has a freer market in banking than the U.S.
Australia has less government spending than the U.S. (normalized)
The freedom of starting, operating and closing a business in New Zealand is much better protected in New Zealand than any other country in the world.
There are freedoms you have to pick among your favorites. No country is perfect, but Canada is appealing to me because of its lower taxes and personal freedoms.
If by “quality of life” you mean shared amenities, the U.S. is indeed worse off.
On the “standard of living front,” on the other hand, we have more stuff and more square footage.
I’d take the European deal, but lots of immigrants like what the U.S. has to offer. But I’m not sure either deal is sustainable, as both are built on debt.
I’d take the European deal, but lots of immigrants like what the U.S. has to offer. But I’m not sure either deal is sustainable, as both are built on debt.
Is it not possible that systems built on debt are sustainable “forever” albeit subject to periodic, wrenching restructuring and/or writing off of the debt?
I do not believe equal amounts of “wealth” and resources are destroyed when an amount of debt is destroyed or written off.
“TrueCoward™”
“The Author: Just another WordPress.com weblog”
Who would listen to Gandhi or Jesus if they spoke of “The Truth” as …”Joe Anonymous”
(My ears were quite receptive to his mention of MONSANTO…)
(Hwy’s gonna make a kiwi margarita in honor of “The Echo of Aladinsane”)
He’s got half of it right and half of it wrong.
And then he just goes striaght off the reservation.
This goes out to all of the douchebags who didn’t believe me:
http://www.msnbc.msn.com/id/36226444/ns/business-personal_finance
That’s what happens when you vaporize the middle class. What do you want from them? Their first-born?
They have NO money because the wealthy money masters have directed all the money into their own pockets.
My personal guess is that the PTB are hoping to extend and pretend until any impetus for financial reform is swallowed up by recovery euphoria. At that point, the banksters can get back to their systemic theft business as usual without the hassle of dealing with the uproar over bailouts that accompanies the meltdown phase of a crisis.
The Washington Post
Still no consensus or major reform after global financial crisis
By Steven Pearlstein
Wednesday, April 7, 2010
…
Under Dimon, J.P Morgan saw the subprime mortgage bubble early and moved quickly to reduce its exposure. It never got into playing games with off-balance-sheet vehicles nor did it traffic in collateralized debt obligations, real or synthetic. Dimon insisted that his bank have access to enough liquidity to get through two years without having to tap short-term credit markets, if necessary. And when other executives were confidently telling shareholders in early 2008 that the future looked bright, Dimon was acknowledging that underwriting had gotten dangerously sloppy, that too much of what passed for financial innovation served no useful purpose, that growth rates in the industry were unsustainable and that serious turbulence lay ahead.
But three years of industry vilification now seem to have taken their toll on Dimon. His latest shareholder letter, released last week, still has plenty of candor, some of it refreshing and some of it self-serving, but there was also an undercurrent of defensiveness. It may be true, as Dimon claims, that J.P. Morgan would have survived in even better shape if the government had not stepped in to bail out the industry, although that is only conjecture. And although he is right to push back against the populist notion that, when it comes to banking, big is always bad, he also clings to the free-market fiction that the benefits of scale and scope are passed on to customers rather than captured by the banks’ shareholders and employees. The levels of trading profits and compensation surely suggest otherwise.
Like other Wall Street titans, Dimon is eager to demonstrate that he supports reform of financial regulation even as he opposes many specific ideas proposed by the Obama administration and Democrats in Congress. What’s missing, however, is even a hint of acknowledgment of how wrong the industry has been in its lobbying on such issues.
After all, the industry opposed registration and disclosure requirements for hedge funds, just as it opposed all regulation of energy and credit derivatives. When bank regulators in the George W. Bush era took the first steps to put the brakes on runaway real estate lending, the industry put up such a stink that implementation was delayed until the bubble had burst. And when the government proposed rules to make sure new “structured products” were not used by corporate customers to evade regulation or mislead investors, industry pressure resulted in watered-down rules that allowed such abuses not only to continue but flourish.
Given this track record, why should we listen to them now?
Dimon insisted that his bank have access to enough liquidity to get through two years.
This business lingo is really annoying. What Dimon is saying here is that “I want to have enough cash in the checking account to pay the minimum payment on the credit card, without using a cash advance from another credit card.”
Big freakin’ whoop. Hardly a conservative policy. Take out the fancy words and they sound like the high end of a subprime trailer park.
Oh and just once I’d like to see a tranlation of that stupid AAA/BBB/BBB+ bank credit rating scale. In my high school, we didn’t bother with A B C D, we all just got 85 and 92 and failed with 64. Of course, if banks actually spoke plainly, then we’d know what they were doing, and we can’t be having any of that.
Man before October 2008, I remember Chase being on Reggie Middleton’s doo doo 32 list of banks in trouble w/lots of supporting data. He wasn’t the only one making that claim.
JPM was then, and I believe still is the largest holder of derivatives contracts (the most highly leveraged financial instrument on the planet) of all financial instituitions. I suspect the real target of the bailouts was “Jamie the bookie” as he had the most at stake when things went sour. JPM is like the AIG of derivatives and was about to fail in a huge way. I think more might be told of this one day.
I think more might be told of this one day.
Those that win the war usually control history, my guess is Jamie will come out of this smelling like roses after the history books are written. He may be writing the chapter himself.
Yep.
Side note - JPM is actually where CDS were invented.
Good morning?
I *thought* I was first today, but I posted a link. DOH!
Good Morning!
It’s all coming… VAT, Cap&Tax, and any other tax,fee, etc…That can be dreamed up.
Volcker: Taxes likely to rise eventually to tame deficit
Apr 6, 2010
NEW YORK (Reuters) - The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.
Volcker, answering a question from the audience at a New York Historical Society event, said the value-added tax “was not as toxic an idea” as it has been in the past and also said a carbon or other energy-related tax may become necessary.
Though he acknowledged that both were still unpopular ideas, he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.
..getting entitlement costs and the U.S. budget deficit under control may require such moves.
What we should do is bundle the money into large, solid bricks and fire them from a cannon, aimed precisely at the center of that black hole. If our aim is off my the slightest amount, the money-bricks might clip the event horizon and careen off into space, to be lost forever.
What else can they do?
Let the big financial companies fail, cut government programs and reduce spending, attack fraud, avoid duplicate safety nets? No its easier to pretend that there’s an endless supply of $$ and that we can fix this thing next year (just like GM did).
I think that the Tea Party Movement is just starting to gain popularity and will have a huge effect on our politics, especially after all of these new taxes become apparent. “A Rasmussen poll released Monday found more Americans identify with the Tea Party groups than with President Obama.”
“According to the survey, 48 percent of voters said the average Tea Party activist is more aligned with their views on major issues than the president. Forty-four percent said Obama’s views are closer to theirs.”
http://www.foxnews.com/politics/2010/04/06/tea-party-going-mainstream-polls-suggest-movement-gaining-popularity/
The concern I have with the TeaParty movement is that if they decide to run a third party candidate for President, they will siphon enough votes from a legitimate Republican candidate (if there is one) to insure BHO a second term; sort of the mirror image of the GHWB/Ross Perot fiasco in 1992. A lame duck BHO would truely be a threat to this country.
Had it not been for the little man, WJC would have been a footnote to history, a great orator at the Democratic Convention, and not much more. How would this have changed history? That is an interesting odessy for the mind.
Yep, except maybe for him being a “footnote in history”. I think he would have made a run in 96.
Same third-party thing applied to Nader in 2000. If he wasn’t the popular third-party candidate Gore would have easily won.
Sman,
“The concern I have with the TeaParty movement is that if they decide to run a third party candidate for President”.
While it’s possible, I think the TP is more likely to take over the Republican Party as the conservatives did when Reagan was the President. IMO they seem pragmatic enough that they just want the taxing and the spending to stop, and that includes the spending by the Dems and the Repubs.
You are correct and starting a new party would lead to another BHO win. But who knows, it looks like Hillary is starting to separate herself from the BHO regime and maybe she might run against him. Hell hath no fury like a Clinton thats been spurned.
Lip
You’re dreaming, Lip. Hillary will be a good soldier and run in 2016.
The concern I have with the TeaParty movement is that if they decide to run a third party candidate for President, they will siphon enough votes from a legitimate Republican candidate (if there is one) to insure BHO a second term;
That’s why it’s Palin’s sacred duty to get in front of the TeaParty and direct it back (!) into the Republican fold. It is, after all, the real numeric base of the Republican party that’s forming the TeaParty. The Repubs simply cannot lose this demographic. If Palin brings them back into the fold, she’ll be rewarded with the nomination- if she wants it. And then she’ll lose to Obama.
How much taxation is enough?
” The Tax Foundation estimates that some 60% of American families already get more from the government than they pay in taxes (and the top 10% of earners pay more than 70% of the income taxes).”
“We are heading toward being a country where instead of the people deciding how much money the government should have, the government decides how much money the people should have.”
http://blogs.usatoday.com/oped/2010/04/column-how-much-taxation-is-enough.html
I pay an effective tax rate of 24-25%
The top 400 wage earners in this country who make on average 350 mil a year pay 16%. The numbers get even uglier when you throw in state taxes. Don’t cry for the elite Lip they get a huge percentage of the gov handouts and pay the least on their ill gotten gains.
Don’t forget that the poor get hit with plenty of state taxes and the ugliest tax of all inflation.
“We are heading toward being a country where instead of the people deciding how much money the government should have, the government decides how much money the people should have.”
We are becoming a country where the gov decides who should control all the money. Correction we are becoming a country where those with money use the gov to take from everyone else.
MEASTON,
My concern is that they cannot raise the amount of money that they need without taxing the hell of out the middle class. It’s just a mathematical fact.
In addition I don’t think any of us really know how much we pay as everything that we buy has the cost of taxes included in it. Ex: If they tax the car companies, that cost gets added into the cost that we pay. The general public pays all of the taxes if you look at it this way. Thats why a VAT would be so devastating to the economy. Everything would be much more expensive and many of us won’t be able to get that next new car or whatever.
I seem to recall reading that right after Canada initiated a VAT, its national economy came to a screeching halt. Reason: Consumer spending all but stopped — something about prices going up significantly.
I seem to recall reading that right after Canada initiated a VAT, its national economy came to a screeching halt. Reason: Consumer spending all but stopped — something about prices going up significantly.
A. Seems like “screeching halt” is a bit hyperbolic.
B. IMO that’s exactly why we need a VAT. We simply spend way too much money, which is why we are farther into debt than we should be.
P.S. That’s exactly why I expect a VAT tax to never be implemented in the U.S. - at least not in significant size. Our bankers are too smart - it’ll cut too much into the profits they make from debt.
And why shouldn’t we ‘tax the hell’ out of the middle class? They get so much special treatment now.
For one thing, you could probably easily pay for health care for kids simply by eliminating the per-child tax deduction. I would absolutely support this.
For one thing, you could probably easily pay for health care for kids simply by eliminating the per-child tax deduction. I would absolutely support this.
Or the child-tax CREDIT.
Remember, Lip, that you are taxed on your adjusted gross income. High earners have lots and lots of ways of reducing AGI. We can put $80,000/year in retirement accounts, and subtract lots of expenses from 1099 income. Our Federal taxes ended up only 20% of gross last year, and most of our income is salary with a W2! If I was incorporated in private practice I could subtract even more! Don’t believe everything Larry Kudlow and Bill O’Reilly tell you. I’ll bet your tax rate last year was higher.
This is nonsense. I am a small businessman in California, an “S” Corporation, and taxes are crippling.
Not everyone lives in California.
Same goes for you New Yorkers.
REhobbyist,
I believe that was my point. We all pay more taxes than we can think of.
Income tax
property tax
electrical tax
natural gas tax
telephone tax
gasoline taxes
food taxes
clothing taxes
retail taxes
Taxes included in the cost of everything we buy
etc
etc
etc
Since I have a home (for sale again), 2 kids (sorry Reuven), give to charities and have medical costs, I’m able to itemize my adjusted gross income down but as you can see above, I’m paying plenty already.
IMO we are not undertaxed, they (most governmental agencies) overspend like a drunken sailor. Even as we speak the governmental agencies are trying to spend their entire budget in order to make sure they get the same if not more next year.
Volcker continues to be used as a tool by Obama, this time as the no-nonsense father figure telling us we should take our medicine.
Note that it is Volcker that is saying these things and not Obama.
he’s supposedly answering a question from the audience.. i searched pretty good but cannot find the question..
Volker will either issue a statement clarifying what he “meant to say” within 24 hours, or it won’t happen. If it doesn’t happen, he’s out of my will.
“…should consider raising taxes to help bring deficits under control ”
God forbid we’d be cutting spending to bring deficits under control.
Amen, brothah!
“God forbid we’d be cutting spending to bring deficits under control”.
That’s a completely foreign concept to politicians,city,state and gubmint agencies. Cutting spending is an action of ultimate last resort. Someone some where may not get something from someone else that they “deserve”. So…tax’um.
Oh they cut plenty of spending. Just not the brother-in-law deals or no-bid contracts.
But public benefits and programs, public service hours, infrastructure maintenance? You betcha!
That’s right. Next year I get all the most severe special ed kids thrown in my classroom because they’re cutting special ed to the bare bones. You have no idea how much suffering for the kids and the teacher that creates. But heaven forbid Goldman not get every penny coming to her from Obama and Bush.
Exactly, eco!
If they want a VAT, they should repeal the payroll tax at the same time.
Add a regressive tax on spending, eliminate an even more regressive tax on working. Keep the progressive income tax.
If they want a VAT, they should repeal the payroll tax at the same time.”
yes they should but I bet they don’t more taxes for everybody as predicted on this blog all to pay for the housing Bust that most of us didn’t cause. nice
How’s value added tax going to work if said value addition happens in China? I expect huge import duties to more than level the playing field.
A true VAT tax is terribly complicated and subjective. The notion is that a company pays a tax on the sale of a good net of any tax paid on the purchase of components in that good. In a situation where a product moves through several transactions before selling to the end user, the redundant recordkeeping burden is tremendous. The government like the tax because it hides the tax in the sales price of the goods as opposed to putting it out there for everyone to see as a sales tax does.
I have read a number of reports that say to replace the federal income tax (not including FICA) with a Federal Sales Tax would require tax rates of 30% to 33%, assuming that food and medicine is not subject to the tax. I personally would prefer a national sales tax, assuming that one could get past the transition issues, particularly double taxation of after tax accumulated wealth. This is because I am more a saver than a spender.
It will never happen, the tax lawyers, CPA’s and IRS have a vested interest in keeping it. Plus, the Income Tax is used as a tool of societal coercion.
For those of you that believe there is no bubble in Rochester, check this story out:
http://www.democratandchronicle.com/article/20100407/BUSINESS/4070359/Developer-offers-incentives-for-businesses-to-move-to-his-Monroe-Avenue-properties
The reason I posted this is because, in 2003, my friends and I considered going in together to buy the building (182 Monroe) featured in the story. At the time, all of us were living on Marshall St. and we’d sit on our porches, thinking, “let’s buy that.” It would be an awesome space to have a production studio and it’s large enough to house 3-4 edit rooms with a small sound stage / live room + 2 stories of residential above. Long story short: it’s a cool building, but even back then we knew it was a stupid area to invest. The guy that bought has never really established anything in there. For a while he had a bunch of his “antiques” there… no traffic whatsoever.
Anyway, I passed on it in 2003, and still, nothing…
I have never been to Rochester, but I could have told anyone there was a bubble developing there in 2005. Why? My previous neighbor, a gay man, had a large group of gay friends who were flipping properties in WA state up until 2005 when things got too expensive for them. The group, close to 30 if my memory serves, moved on to Rochester NY because it was voted the most “undervalued” in whatever magical little survey they read. They started buying up multi-families and commercial properties. This sort of speculation is the telltale sign of a bubble.
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajX.6BYaJXBQ&pos=5
‘The giant vampire squid across the face of humanity,’ a.k.a. the Obama campaign’s second-largest contributor, a.k.a. Goldman Sachs, denies betting against the subprime mortgages it sold to clients. Sounds disingenuous to me.
If Goldman = God
and Greed = Temptation
and Temptation = Sure-thing market rigged by Fed
then Fed = Devil
burn in hell bankster b@stards.
Goldman says did not “bet against” clients
Apr 7, 2010
(Reuters) - Goldman Sachs Group Inc (GS.N) said it did not intentionally “bet against” securities in the mortgage market during the financial crisis, dismissing suggestions that it unfairly made money by placing bets against its clients.
“As a market maker, we execute a variety of transactions with clients and other market participants … which may result in long or short risk exposures to thousands of different instruments at any given time,” Goldman said in an annual letter to its shareholders.
Goldman said it did not generate enormous net revenue or profit by betting against residential mortgage-related products.
However, following its decision to reduce its exposure to risky mortgage securities, the bank said it lost less money than it otherwise would have when the residential housing market began to deteriorate rapidly.
The other part of Goldman’s risk-management strategy was to buy FOB (Friend of Bankster) politicians, overwhelming Democratic, who would ensure GS’s bad bets would be covered by U.S. taxpayers and that GS alumni would craft economic policy aimed at facilitating Bankster swindles on the public before heading through the revolving door back to Wall Street.
No need to inject politics. They bought both D’s and R’s. After all, the best ROI in the world is the thoughtful purchase of a Senator. And “throwing the bums out” probably won’t help, because the banks will buy the new guys too.
It only looks like they bought more D’s because it so happened to be D’s in charge when all the nefarious deeds came to light recently. What about the 25 years of complicity up until this point? cf the 2005 credit card bill, when R’s were in charge. And all that d-reg under Reagan/Clinton? Not to mention the rampant outsourcing while we were all distracted by the internet productivity gravy train.
My disdain for BOTH parties is well known in here. Bush got the ball rolling with TARP, not to mention the two endless wars he put on the national credit card. But it is a fact that GS gives much more heavily to Democratic than Republican candidates - look it up yourself. No argument that BOTH parties are beholden to Wall Street and the corporate whores of K Street who author virtually all legislation that goes to Capital Hill. Also agree that “throwing the bums out” is mindless and pointless if the new bums are also on the Wall Street payroll.
Here’s a picture of the last 8 years of “leadership”…(They didn’t get ‘er done… those “permanent” tax cuts for the wealthy…tsk, tsk, tsk)
http://3.bp.blogspot.com/_oCyrFKNfb_o/R_nFJmZJjiI/AAAAAAAAAVY/8DGTurut1TM/s320/BushGreenspanBernanke.jpg
The Repubs had the power to make permanent tax cuts, but they didn’t do it because it would have revealed huge long term deficits. They were chickens, so they reduced taxes while increasing defense and medicare (Part D) spending, leaving the reckoning until 2010. And here we are. Totally screwed.
These guys are pigs
The arguement that they didn’t make much because of their real estate bets during the crash and thus didn’t bet against their clients is nonsense.
They made piles of money before the bust, just breaking even during the crash was a gift and they did better than that.
It’s like going to Vegas and betting red everytime when the ball lands on black the gov swoops in and bails you out.
More anecdotal observations:
We often travel between San Diego and L.A., and focus on how the commercial and residential RE sectors are faring.
As I’ve mentioned before, there was an obvious drop-off in business activity in Q3 2007-Q1 2009. During this period lots of residential inventory hit the market, and retail/commercial spaces were going vacant at an astounding pace.
Around February 2009, it seemed as though everything was beginning to turn around. People who were out of work were beginning to find new work (almost always at lower pay), houses were being bought by swarms of anxious buyers (and often by “investors”), and commercial spaces began to fill up a bit (with regional variations, and it never really got out of the slump). During Christmas 2009, things really looked as though they were recovering, and I began to doubt my bearishness.
On our most recent trip this week, it looks as though the commercial sector dumped after Christmas. It seems that businesses were trying to hold on through the holiday season, but couldn’t hold on any longer after that. We believe it is getting even worse in the commercial/retail space than during the depths of the downturn. Some pretty amazing carnage out there. Again, it’s regional, but I think we’re beginning to see the early signs of another retail/commercial RE dip (yes, it’s been dipping for a while, but looked like it was stabilizing/getting somewhat better).
Also, residential RE is not having nearly the spring kick that it usually has. After much frantic buying over the past year (lots of bidding wars and very low inventory, even throughout the winter months), I think a lot of the “investor” purchases (MLS and non-MLS — think bulk REO purchases) from last year are coming onto the market now. Additionally, it looks like we might be seeing some more foreclosures.
I spoke with a few (of the more honest) RE brokers/agents, and they are also sensing a very subtle slowdown. This might be a head-fake, but I think we’re about to see things turn down again.
Nice road report CA.
I hear alot of unsubstantiated talk of “stabilization” but it’s never clarified when I press for more detail. The latest type of house hitting the REO lists in downstate NY are McMansions/big ugly houses. Additional entry level stuff is sitting empty without 4sale signs on them. I’m getting the drift that whatever little demand there is for housing, mcmansions and entry level houses aren’t it.
I agree. Here in Sacramento I’m seeing increasing house inventories and lots of price reductions to compete with the forclosures coming on the market.
CA Renter,
Here in AZ Commercial RE is just dead, with many vacancies and many commercial buildings that have never been occupied since they were built.
Residential has begun to level off in some areas, but with a shadow inventory that’s huge in the areas that I monitor (85086, 85310 & 85383). Knife catchers are jumping in to buy the cheaper residential homes and banks arevstarting to list a portion of their inventory. Generally speaking the large McMansions are getting less per sq ft than some of the smaller more affordable homes. Some of these cost over $500 per month to cool in the summer and I suspect that these energy costs are holding down some of the pricing.
The result is the construction trades are really struggling to maintain their businesses, many have laid off more than 50% of their workers and many employees are working less than 40 hour work weeks. In general the economy sucks.
On the other hand, NM seems to have more governmental projects at their national labs, airbases and public education schools.
I want to know where did all the money go?????
I hit another huge pothole this morning making a right turn right and it’s in the middle of a crosswalk…geez… luckily no damage…but this is nuts I have never seen so many roads in such disrepair in my life….
Three words, Public Employee Pensions.
At some point those of us starving for public services are going to tire of seeing the majority of our taxes go to pay retired public servants, particularly after seeing our pensions and 401-K’s decimated.
I’ve been wondering if there is any kind of optimum size for a community.
In Flyover, most of the small towns don’t seem to have these problems with pensions, either because the services aren’t offered, are done with contractors, or part time volunteers (volunteer fire departments). It’s only when you get to a population of 100-150K that government bloat seems to set in, and “professionals” start taking up the positions.
Is it because freeloaders aren’t nearly as anonymous in small towns? Do small towns generate more jobs, given a certain population?
In the small town I grew up in, the average family just lives on a lot less money, and basically just lives off of SS once retirement time comes. They all wish they had a shot at those gravy train jobs in the city, but not bad enough to actually live in the city. Not sure if that answers your questions or not…
Thanks, CA. I enjoy the individual anecdotal reports because I don’t think every market is moving in tandem. I’ve noticed the MSM has issued a look out for a resumption in hiring. But so many businesses are just plain gone. I have a CEO friend that lost his position but quickly found another. It’s just that it was at 1/3 less pay. Individuals may find a ray of sunshine but overall we’re not going back to 2005. I wonder how many avg people spending away out there actually know that.
Locally we’re waiting for schools, town, county and state govs to announce lay-offs and several larger manufacturers in the area have issued early retirement packages looking for numbers before they consider lay-offs. We’ve lost a noticable number of Mom and Pop businesses. I’m not a mall shopper so I can’t comment on that retail. It’s difficult to say if I’ll see the next slowdown wave coming. I seem to have surrounded myself w/energy, defense, and medical/pharma sector friends that have so far been untouchable and are living a “life goes on” existence. In my work, I’m surrounded w/medical. There are concerns but I don’t see lifestyle changes. I do know some children’s summer programs aren’t hitting numbers. I know from bankruptcy attorneys trouble’s coming. But so far the pain is still under the surface.
Here’s a funny little observation: many of the families that bought homes we’ve considered: Indian, Middle Eastern or Asian. Young. Plastic kid gyms in the yard. The town’s not that big. It’s noticeable. At work, we’ve had people come in with interpreters. Noticed them around town too. They’re smart. They have good jobs but speak absolutely no or very little English.
They have good jobs but speak absolutely no or very little English.
How can they hold “good jobs” if they can’t speak English? Most good paying jobs involve writing reports, specs, analysis, etc., and reading them as well.
You’re right. I wrote that w/o thinking clearly. A certain family member has the good job and speaks English. Spouse and kids not so much. One particular gentleman who I chatted w/for a while was here w/ temporary work for a German manufacturer. He’s German. I ran into them again recently and he was with his family. People waiting on them were asking questions but the daughter could only nod and smile. She’ll learn and it will be a fantastic experience for her and those around her. I was only pointing out there seems to be an explosion in foreign born workers coming into the area lately.
“speak absolutely no or very little English”
I think this has always been typical of immigrant families… I grew up in an inner city neighborhood with many Italian and Eastern European immigrants…
The immigrant parents tended to have blue collar jobs in places that employed a number of their countrymen and could accommodate limited language skills. (So having a fluent skilled breadwinner would in my opinion be a advantage for newer families.)
The kids learned English, but also spoke their native language at home. Many acted as translators for their parents and had a lot of responsibilities thrust on them the “American” kids didn’t have.
The grand kids mostly spoke English only. In fact they successfully lobbied to have Italian classes added to the local high school (this was the mid-70’s) and the grandparents (who were primarily Sicilian) complained that they were teaching the wrong dialect!
The grand kids mostly spoke English only. In fact they successfully lobbied to have Italian classes added to the local high school (this was the mid-70’s) and the grandparents (who were primarily Sicilian) complained that they were teaching the wrong dialect!
This happened in the high school I attended outside of Philadelphia. The Italian classes were very popular with the kids of Italian descent. But I seem to recall that some of the grandparents weren’t pleased with how my classmates spoke the mother tongue.
OTOH, my best friend in high school was of German descent. Her family, without exception, was tickled pink over the fact that she took four years of high school German. This was despite the fact that the German teacher’s incompetence was known far and wide.
Here’s a funny little observation: many of the families that bought homes we’ve considered: Indian, Middle Eastern or Asian. Young. Plastic kid gyms in the yard. The town’s not that big. It’s noticeable. At work, we’ve had people come in with interpreters. Noticed them around town too. They’re smart. They have good jobs but speak absolutely no or very little English.
———————–
CarrieAnn,
We’re seeing much of the same here. Somehow, foreigners (many Chinese) are coming here with lots of cash and buying expensive homes.
Like you said, they’re smart, and I’m sure they’ll end up succeeding here. But without these foreigners, I’m not sure how our housing market would be doing right now. They seem to be propping up the higher end of the market.
Here in Colorado I’ve never seen so many office buildings with big banners advertising vacancies or offering concessionary deals like FIRST THREE MONTHS FREE! This is among the next shoes to drop.
The businesspark where my employer is located (in Westminster) is about 60-70% vacant.
We just rented 3800 square feet, power included, in a downtown area. Pay less for it than I do my apartment. Grr.
I hear on the radio San Diego is recovering faster than most places across the nation.
houses under 400K sell very fast here. where is the money coming from ? I don’t know ?
here
Here in IL there doesn’t seem to be as many open houses happening as in past years. Listing agents in this area seldom do open houses on foreclosures or short sales, which might explain some of the drop. Perhaps we’ll see more now that Easter is behind us. We expected to see more given that its now “the season” and there is limited time left for buyers to claim the tax credit.
On the other hand, traffic is as heavy as its been in two years, including truck traffic - a puzzle given currently high oil prices.
And open houses are more opportunities for Realturs to get a list of new possible clients than to get buyers… If they have some serious lookers there’s no time to waste on lookie-loo’s
My neighbor down the hall is chasing it down: $299k, $284k, $269k, $239k
This is over he course of most of the past year. And I thought taking 60 days to sell in 2003 was bad. Paying bills when you have already decided to move is excruciating.
Now, some think that defaulted FBs are living for free and using their money to stimulate the consumer economy. But I ask, how many sellers out there are simultaneously pumping money into a place they have long since decided to sell? Money down a rat hole never to be seen again?
“Money down a rat hole never to be seen again?”
You mean homeownership? That’s how it goes. The FBs not paying really are supporting the fake recovery. I personally know several who are spending every penny on everything but the mortgage/tax/insurance. Apparently once you establish that you are a victim, the sky is the limit to what you can rationalize. Perhaps if we had some leadership?..
Perhaps, but there are also a lot of sellers and owners paying carrying costs for houses they really don’t want anymore.
When one looks are how often Americans were moving before the bust it becomes reasonable to assume that more and more owners are becoming antsy as this grinds on and on. Every dollar they spend to carry an unwanted and declining asset is waste - in every sense of the word.
My postulation is that these hapless owners and sellers might be burning more cash than the defaulted FBs are pumping in.
No way. The hapless owners you are referring to are probably busily whining to the banks/government about how to get a principal reduction or whatever bailout assistance they can chisel from the taxpayers while they threaten with strategic default.
New program could rent 3-bedroom houses for $600/month
latest real estate news »
New program could rent 3-bedroom houses for $600/month
By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 11:18 a.m. Tuesday, April 6, 2010
Adopt-A-Family of the Palm Beaches is holding a community meeting Wednesday to discuss its new $7.8 million program to buy and rehabilitate foreclosed homes in Lake Worth.
The money, which is part of a $23 million federal Neighborhood Stabilization grant awarded to the Lake Worth Consortium, will help the group buy about 50 homes in an area near downtown and both east and west of Dixie Highway.
Low-income families will be able to rent and buy the homes for reduced prices. The meeting will be at 6 p.m. at Compass, Inc., 201 North Dixie Hwy.
“We really want folks willing to stay in the neighborhood,” said Wendy Tippett, CEO of Adopt-A-Family of the Palm Beaches. “Putting this kind of money into this area should do wonders for the city.”
A proposal on how the money will be used says about $100,000 will be set aside to buy each foreclosed property with another $60,000 available for improvements on each home.
Tippett said the program is still in its early stages, but she hopes to sell the homes for about $70,000. Rent for a three-bedroom may be as low as $600-a-month.
What a bizarro world it’s gotten to be:
CNY home rental: $2200/mo.
Palm Beach home rental: $600/month.
The money, which is part of a $23 million federal Neighborhood Stabilization grant awarded to the Lake Worth Consortium
In other words - government housing, funded by taxes and inflation; i.e. mostly by savers.
I will continue to harp on this - this is one of the outcomes of the bubble, that I predicted years ago.
Yesterday evening my phone rang and it was one of those “phone link” town hall meetings with my local state representative. It was very interesting to listen for a while. A large part of the time was taken up with the education bill that Muggy has discussed here. She’s for it, and going on and on about incentivizing teachers that do well and penalizing those that don’t. You know, this wouldn’t be a bad idea for politicians, either. Except they’re already incentivized by corporations and of course, themselves.
Then there was oil drilling off the coast. Two things ticked me off about that. My rep kept talking about how other states drill, so “we” should drill, too. Whatchoo mean “we”, Paleface? “We” (meaning the state of Florida) don’t drill. Corporations do. And I doubt if we’ll see much in the way of $$ for that. Secondly, she blabbered about how we need the drilling because of the price of oil (oh, BINGO! I just got it while I was writing this, what a coinkydink that oil prices are going up dramatically JUST as this issue has come to the fore in a number of states). Of course she didn’t mention market manipulation as the major reason oil prices are up at this time.
Sounds like conservative NIMBYism to me. Suddenly all those environmental regulations don’t seem so absurd when it’s your beach that’s getting drilled, baby.
I’m a big believer in protecting the environment, but cannot tell a lie: I did some moonlight drilling on the beach, back in the day.
Uh sammy shhhhhhh we all did…..
My father told me at a very young age to never fall in love at the beach.
But did you leave an oil slick?
I noticed that all of the proposed offshore drilling will be off the shores of red states, right up to New Jersey, which recently elected a Republican governor. Interesting tactic - blue staters will be pleased and red staters can’t complain because that’s what they asked for.
http://www.nytimes.com/2010/03/31/science/earth/31energy.html
IRS will just take ObamaCare penalties out of your tax refund
Washington Examiner
That interest-free loan you gave the government all year long will now be used against you, the IRS Commissioner says.
From Reuters:
“The Internal Revenue Service could tap individual tax returns to collect fines against people who fail to buy health insurance as required under recently enacted healthcare legislation, the U.S. tax commissioner said on Monday….People who do not comply would be levied penalties, and if they don’t pay them the penalties could be taken out of their tax refunds”.
“There has been some insinuation about how we are going to approach our job,” IRS Commissioner Douglas Shulman said after speaking at the National Press Club. Under the new law, the IRS cannot seize assets or levy fines, so Shulman said refunds were the most obvious option to collect penalties”.
Perhaps you want to consider increasing the number of withholding exemptions you take at work.
My daughter recently started work in CA. I was helping her figure out her required CA withholding (there is not state income tax in WA so this is a new thing to her). My advice to her was to be sure that she winds up owing the state, not vice-versa. The same will be true with respect to federal income tax for those that choose to remain uninsured. A few dollars of penalty is money well spent.
Black markets here we come.
http://www.syracuse.com/news/index.ssf/2010/04/lawmakers_approve_funding_plan.html
Lawmakers approve funding plan for $12.4 million sports arena at Onondaga Community College
Sports is huge in CNY. I’m not talking football. I’m talking boomers and Gen Xers flocking to gyms embracing running, triathlons, biking, and body building in ever increasing numbers. The post college guys also embrace basketball. I’d be the first to say there is more demand than supply. However, I find this expenditure shocking. “Half of the cost, or about $6.2 million, will be covered by the state. County taxpayers will kick in another $2.8 million, for which the county will sell bonds. For the remaining $3.35 million, the county will loan the money and the OCC Foundation, the school’s fundraising arm, will pay the county back.” (!!??!)
Something else I’ve noticed an explosion of the last year: low budget travel lodges. They’re springing up everywhere…..which makes one ask where this explosion of business people is coming from in an area with over 9% unemployment. Something is going on w/commercial building that doesn’t pass the smell test.
Yes, this combined with what you posted above ($2,200 rent) are all the telltale signs of upstate arriving to the party late. The only thing upstate was ever in front of, was domestic partner benefits. Everything else? 10 years behind…
You have a bubble for sure. Trust. Upstate now reminds me a lot of Florida 2005. There’s still enough momentum for peeps to think they’re an exception.
HomeAway launches real estate marketplace
Austin Business Journal
HomeAway Inc. took another evolutionary leap today, adding a real estate marketplace to its successful vacation rental business.
The Austin-based enterprise has been on the growth fast track in the past year, scooping up three competing rental sites, closing more than $300 million in financing and launching its first national marketing campaign. The company is frequently mentioned as a likely candidate for an initial public offering when the global economy improves.
Now HomeAway founded in 2005 is diving into a new business with the launch of HomeAway Real Estate.
“HomeAway Real Estate helps sellers maximize the sale price of their second homes, buyers find the best vacation home for their needs, and real estate agents do more business thanks to highly-qualified leads,” HomeAway CEO Brian Sharples said.
The venture is still rooted in its core model, targeting buyers looking to purchase a second home with rental potential. HomeAway said it already has 200,000 home listings that highlight a property’s income potential and vacation-specific characteristics.
Bloating and exploding inventories
Flat/falling sales volume in spite of massive govt. life support
skyrocketing foreclosures rates
All this good news (yes good news) about housing doesn’t at all line up with the REIC stabilization talk. Frankly, I’m enjoying it considering the season. We all recall the heady, happy BS talk in the spring as recently as last year. Not now. Nope.
:Cheers:
Hey! Don’t piss on the recovery. Some people still believe its real.
Greenspan is on the tube now, blaming the economic meltdown on Fannie and Freddie. He says that he warned in 2004 of potential problems with the GSEs buying subprime mortgages, and that the Fed began its warnings in 1999. Not his fault at all.
379 years, that would give some updated context to the “historical” chart, aye?
Public humiliation:
“In extreme cases, when a knight was found guilty of treachery or treason, he could lose his honour by formal degradation — a public ceremony in which the award was stripped from him.
The last public degradation was in 1621 at Westminster Hall, when Sir Francis Mitchell had his spurs broken and thrown away, his belt cut and his sword broken over his head. Currently, a person can be stripped of his knighthood if convicted of a criminal offence.”
Sir Greenisspent:
“TrueBeliever™ / TrueDeceiver™” / “TrueConundrum™”
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
They still have those ceremonies today. They’re called “Congressional Hearings” for executives.
[however, I’m convinced that the humiliation wasn’t much of a deterrent. After all, humiliation is free. Lying and cheating saves real money for the corp. Those browbeaten execs likely slunk back home to Corporate HQ to a hero/martyr’s welcome, complete with filet mignon.
Cripes - the guy just doesn’t give up. Face it Al - you will never live down your legacy. He’s right to give some blame to the GSE’s, but in terms of the one single person who did the most damage - he’s it.
How’s that “ignoring the Taylor Rule” working out for you Al?
I remember he did have a warning in 2006 it was usual Greenspan speak somthing like this
” periods of time were risky bonds and government bonds yeild spreads narrow like now always end badly”
have to think about it for a few seconds and I have missed most of the big words can’t remember them I guess .
THE GERIATRIC TEENAGER
Steyn on Culture from National Review
“I see some young people in the audience,” said President Obama in Ohio the other day. Not that young. For he assured them that, under Obamacare, they’d be eligible to remain on their parents’ health coverage until they were 26.
The audience applauded.
Why?
Because, as the politicians say, “it’s about the future of all our children”. And in the future we’ll all be children. For most of human history, across all societies, a 26-year old has been considered an adult, and not starting out but well into it. Not someone who remains a dependent of his parent, but someone who might well have parental responsibilities himself. But, if we’re going to remain dependents at 26, why stop there? Why not 36?
An Italian court ruled recently that Signor Giancarlo Casagrande of Bergamo is obligated to pay his daughter Marina a monthly allowance of 350 euros – or approximately 500 bucks. Marina is 32, and has been working on her college thesis (“about the Holy Grail”) for over eight years.
America is not yet as “progressive” as Italy, so let us take President Obama at his word – that, for the moment, your 27th birthday marks the point at which a boy becomes a man and moves out of his parents’ health insurance agency. At what point then does an adult re-enter dependency?
The productive years of the typical worker are being nibbled away at both ends. They are entering the workforce later but also expecting to retire earlier.
Now, are such expectations reconcilable with ever increasing house prices and consumer economy? Can someone who is setting themselves up for working only twenty years ever finance that house and their lifestyle?
This behavior is widespread in my neck of the woods. At local restuarants you can actually hear a 30 y.o. talking about starting their first real job, whilst at another table a 45 y.o. talks about traveling the world after retiring in a few years.
Most 45 year olds that I know talk about working until they are 70 as they have no savings and no pension. That 45 year old you were eavesdropping on must have a cushy gov’t job or is a trust fund baby.
or they never bought a house…
Actually in many cases they are both. I have no doubt that my neighborhood and your town are polar opposites in that regard. People from Long Island, Grosse Pointe, Orange Co., Austin, etc. probably have similar stories.
We are both witnessing the continuing bifrucation of society - just from opposite perspectives.
I am seeing young people unable to kick start the careers they prepared for. So its off to grad school for many of them.
“I see some young people in the audience,” said President Obama in Ohio the other day.
If these vapid, empty-eyed dolts had the intellectual capacity to see the magnitude of the debts and deferred problems The One is foisting on their generation, their reaction might have been more visceral than on-cue applause.
The notion of having 26 year old kids on the parents health plan sounds good, except to the employer who has to provide the coverage. The problem of course is the old health insurance bugaboo, “Adverse Selecton”. By and large, the only parents who will put thier kids on the employer’s health plan are those with kids who are un-insurable in the private market, eg those with expensive pre-existing conditions. Otherwise, a low cost high deductable private market plane makes much more economic sense.
So now the employer has a very expensive “life” on his plan that is not being offset by other low-cost premium producing lives. So the employer has two choices, either drop coverage altoghether, or raise the sharing for all of the participants in the health plan.
This is exactly why true health care funding reform should have divorced health care funding from the workplace altogether.
There’s a feedback loop here. Employers cut costs so 26 y.o. can’t get job. 26 y.o. must stay on parents’ plan. Employers’ costs go up more. 26 y.o. turns 27 and still can’t get job…
+1 edge. I was about to post the same thing. In the past, companies would employ that 26-year-old, not just cover the health insurance.*
And I call BS, for blaming the 26-year-old for not being an adult. If there were still manual labor jobs that you could do out of high school, we’d be adults at 18. (I guess they are adults at 18 in China or in the barrios in the US.) But the “knowledge economy” requires — wait for it — knowledge! And we need ever more training to keep up with the innovation and high-tech.
———
*and just how much does a healthy 26-year-old cost anyway?
A healthy 26 yo doesn’t cost much until he has a motorcycle wreck, rock climbing accident or a major car crash etc, etc.
At my previous employer the son of one of the Union Workabees ran into a snow plow (the kid was drunk). Turned himself into a veg. The company was self funded for health care (up to $125K/year at which point reinsurnce kicked in). The kid went through his $1 million lifetime max on the company policy in about 4 years at which time medicaid picked him up. As far as I know we taxpayeres are still spending about $150K/year to warehouse him.
So, yeah, young people tend not to be in poor health, but they can run up big health care bills regardless.
“A healthy 26 yo doesn’t cost much until he has a motorcycle wreck, rock climbing accident or a major car crash etc, etc.”
i had an 18 year old cousin in a similar situation…
Car accident, spinal injury similar to Christopher Reeves…
Intentionally put into a drug induced coma. Something “happened” at the hospital one night and never regained consciousness. He ran through million dollar lifetime limit in a little over a year.
When the insurance money ran out, hospital sued his parents for custody to force them to move him to a state hospital 200 miles away.
(Died 3 years later)
That’s the idea Spokaneman. The Dems are just nudging the process along a little faster. Businesses were dropping health insurance anyway, this just hastens the inevitable.
What does this news portend for U.S. McMansion demand circa 2030? (Not to suggest that any of the crap shacks built over the past decade will last that long or anything…)
Drop in Birth Rate in 2008 May Be Tied to Recession
By THE ASSOCIATED PRESS
Published: April 6, 2010
ATLANTA (AP) — American births fell in 2008, updated government figures confirm, probably because of the recession. The one exception was the birth rate among women in their 40s, who perhaps felt that they did not have the luxury of waiting for better economic times.
The birth rate for women in their early 40s rose 4 percent over the previous year, reaching its highest mark since 1967. The rate for women in their late 40s also rose, slightly. But birth rates fell for teenagers, as well as women in their 20s and 30s.
“Women are postponing births to those later ages, above 40,” said James Trussell, director of the Office of Population Research at Princeton.
Experts do not know for certain why so many are delaying having children, though some suspect that the economy is a big factor. However, “you get to the point where the biological clock starts ticking and people realize they have to do it,” said Mr. Trussell, who was not involved in the research.
The report on births was issued Tuesday by the Centers for Disease Control and Prevention. It is based on a review of more than 99 percent of birth certificates for 2008 — the first full year of the recession. Over all, about 4.2 million children were born that year, a 2 percent drop from 2007. It is the first annual decline in births since the start of the decade.
Experts say the most likely explanations are the recession and a decline in immigration to the United States, for which the weak job market has been blamed.
…
Fewer illegals == fewer births?
County may lead rental market rebound
Area’s prospects are called best in Southern California
By Roger Showley, UNION-TRIBUNE STAFF WRITER
Wednesday, April 7, 2010 at 12:04 a.m.
San Diego County, with its relatively strong economy, stands to lead Southern California’s apartment market out of the doldrums in the next year, according to a University of Southern California report being released today.
Rents will rise here first and vacancies will fall the most in the five-county region during the next 12 months, the report said.
“After a dismal 2008, Southern California’s apartment markets showed signs of improvement in 2009,” said the report to be presented to the annual Lusk-Casden multifamily housing conference in Los Angeles. “San Diego will continue to outperform the other Southern California markets in rents and vacancy rates, just as it has over the last year.”
Co-authors Richard K. Green and Tracey Seslen forecast a 0.4 percentage point decline in San Diego’s apartment vacancy rate to 4.5 percent. Monthly rental rates will rise a projected 0.7 percent, from $1.52 per square foot to $1.53 next year. For a 500-square-foot apartment, that works out to a $5 increase per month to $765. A year ago, the rate was $1.56, or $780.
The report casts San Diego in a slightly more optimistic light, in contrast to the other four counties, Los Angeles, Orange, Riverside and San Bernardino, where rents are expected to drop, even though occupancy levels are inching up.
Orange County has a lower unemployment rate at 9.7 percent than San Diego County’s 10.6 percent, an all-important factor in determining renters’ ability to afford various types of housing.
“A question is who has the tighter supply at the moment,” Green said. “That’s the most important driver in our models of rents going forward. In both places, we expect rents to be flat for the next year or so.”
Still, San Diego is serving as a bellwether for improved apartment conditions — at least from the investor and landlord standpoint — thanks to military spending and the rising biotech industry. Those and other factors promise to buoy the region in the next year and keep rents from falling further, the report said.
“San Diego is probably a little more amenable to recovery because of the characteristics of where the jobs are, in firms that are more likely to be hiring faster,” Green said. “It’s not like Riverside County, where home building was the principal driver, or San Bernardino, where distribution is the principal driver. Orange County, if you look at its overall history, has unemployment that is very high by its own standards. It was the center of subprime lending. That’s a whole lot of jobs that won’t be coming back anytime soon.”
…
According to that article, San Diego apartment rents are currently $1.52 per square foot (e.g. $1,520 per month on a 1000 sq ft apartment), scheduled to increase to $1.53 per square foot by 2011, according to the Lusk Real Estate Center serial bottom callers.
The purchase price you could fund on current interest rates (say 5 percent) on a 30-yr fixed mortgage with $1,520 monthly payments can be easily calculated in MS Excel using the following formula:
=PV(0.05/12,360,-1520)
The present value comes out to $283,000, or $283 dollars per square foot on a 1000 sq ft condo. There is more to this comparison, but it is interesting to think that many of the folks who are currently renting in San Diego for a lofty price of $1.52 per square foot might actually be able to afford to buy. What’s stopping them?
Radar Logic data suggests San Diego home prices have been stabilized at around $205 per square foot for several months — a veritable permanently-high plateau! By contrast, as I mentioned a couple of days back, my BIL recently bought a home along the Wasatch Front for $62.50/sq ft.
300 dollars a square foot in Poway for the smaller homes less than 1400 square feet on 7000 square foot lots. Homes built in the 1960’s or 1970’s
expensive
I guess it is different in the RB/Poway/Carmel Mtn Ranch corridor!
The Lusk bottom caller comment about San Diego’s “rising biotech industry” reminded me of this article I posted last month. “Post-apocalyptic” and “rising” don’t seem to mesh.
Lab space vacancy is at 10.1%
Experts’ forecasts vary on market’s prospects
By Penni Crabtree, SPECIAL TO THE UNION-TRIBUNE
Friday, March 12, 2010 at 12:04 a.m.
VACANCY RATES
The Cushman & Wakefield commercial real estate firm estimates the vacancy rate for laboratory space countywide at 10.1 percent, with 1.4 million square feet available, in the fourth quarter of last year.
Life-science vacancy rate by submarket:
• Torrey Pines — 10.1 percent
• University Town Center — 22.2 percent
• Sorrento Mesa — 8.8 percent
• Sorrento Valley — 14.4 percent
Since last year, the near-empty life-science laboratory building in Torrey Pines has been a monument — make that mausoleum — to a moribund economy.
“It looks post-apocalyptic here,” quipped Scott Struthers, founder of Crinetics Pharmaceuticals, a fledgling biotechnology company that leased 1,700 square feet in January from Touchstone Investments, the landlord for the 92,000-square-foot property at 11099 Torrey Pines Road.
The building, which Touchstone purchased in 2008 — before the Wall Street crash and the subsequent surge in unemployment — remains about 80 percent vacant, with some 75,000 square feet available to be leased.
“Ever walk through an empty apartment building?” asked Struthers, whose four-person company is developing drugs to treat osteoporosis. “It’s just weird. You can walk 100 yards here, and it’s empty labs.”
…
About 10 years ago someone built a fancy-schmancy state-of-the-art cancer research building here. It had a trés moderne “open” floor plan in that none of the offices had doors. A good friend who is a top oncology RN was hired on as a manager, but the place folded within months. Apparently the “open” floor plan violated patient privacy. Place cost millions…
Its interesting to me to watch the coming and going of mom and pop business in the retail space that has been developed in the last few years.
Recently a high end “exercise equipment” store selling stair climbers, life cycles etc at retail went out of business. It had been in a new retail triplex (between a Starbucks and a high end Barber shop) for about five years. I remember when it first went in thinking “How much of a market can there be for high ticket exercise equipment?”. But I suppose the guy either had some decent Home Equity or an inheritance burining a hole in his pocket (or fueling the entreprenuerial spirit). You gotta know that who ever did this made a pretty small fortune out of a larger one. And resturants, holy criminy, seems like about a 9 month life span. I guess thats why there are 20 or 30 bankruptcies listed in the daily rag, every weekday. Used to be very few.
For a while, CRE, “if you build it they will come”.
A few weeks ago, I attended an SBA seminar. Seems that, since they’re so risky and tend to die young, SBA loans aren’t available for restaurants. Ditto for veterinary practices. They tend to fold at a high rate too.
Friend of mine lost his high-paying job and moved to Florida, planning on buying a bar or nightclub with an SBA loan. He was checking out million dollar properties (this was in 2005, the party was still on, but getting tired). I told him he was delusional, he finally applied and learned I was right. He bought some condos instead…
Overtaxed homeowners start to fight back
Millions paying property taxes based on value of home before bubble burst MSNBC 4-7-10
Now that the housing bubble has burst, up to 60 percent of the nation’s taxable property may be overassessed, meaning owners are paying thousands of dollars more in taxes than they need to, experts say.
That is leading to a flood of appeals in many markets from homeowners eager to cut their taxes and speed the process of aligning tax valuations with reality.
While home prices have fallen by 30 percent on average since their 2007 peak, according to the Case-Shiller Home Price Index, many counties only reassess every three to five years and have little incentive to move faster considering how important property taxes are to funding local government operations.
State budgets whose revenues depend on property taxes look ever more screwed.
If property values decline uniformly, the properties will be reassessed downward uniformly and millage rates will be increased uniformly. Viola, no decline in tax revenue. Or at least thats how it works here in Rivercity.
What? No more “silver lining” stories about how owners would see lower property taxes because of falling prices? You mean to say the costs of local/state gov’t have not gone down in tandem with house prices?
As Gomer Pyle would have said: “well surprise, surprise!”
Sha-zaaaam!
You all caught this opinion from Greenspan yesterday - right:
“..the housing bubble was ultimately caused by a glut of excess savings in East Asia and other emerging economies that helped drive down long-term interest rates — and not by the Fed’s decision to keep short-term rates low from 2002 to 2005.”
The urge to breathe when holding one’s breath does not come from the need for oxygen, but the need to expel Co2. Come on Greenie, admit that you are a clueless babbling old man.
Interesting - I did not know that.
Along the same lines - I believe the EPA has found that Alan Greepspan’s breath is a significant contributor to global warming. Seems the CO2 content is more than offset by the heat of the air.
Dang, I learn something almost every day from this blog. Thanks pressboard. I just told my mom. Verrrrrrry interesting.
He’s like a sad alcoholic that admits that yeah maybe he’s been drinking too much, but blames his boss for the whole thing - making his work environment too stressful.
At least he finally admits that there was a housing bubble.
“..the housing bubble was ultimately caused by a glut of excess savings in East Asia and other emerging economies that helped drive down long-term interest rates — and not by the Fed’s decision to keep short-term rates low from 2002 to 2005.”
maybe if you add the excess money was used by Mortgage businesses like Countrywide and used badly.
maybe the cash hoards in Asia will find somthing better to invest in than Treasuries in the future ?
“..the housing bubble was ultimately caused by a glut of excess savings in East Asia and other emerging economies that helped drive down long-term interest rates — and not by the Fed’s decision to keep short-term rates low from 2002 to 2005.”
Those damn savers - they screw you every time.
WASHINGTON
Greenspan splits hairs
Former Fed chief says that the U.S. central bank under his tenure wasn’t to blame for the bubble in housing prices.
Well, no, technically he’s right. It was that darn credit expansion that caused the housing bubble. Crickets could be heard when he was asked who/what caused the credit expansion.
+1
You have to concede that AG has a point about pressure to increase lending. Apparently unbeknownst to many D-ratic Congressmen, it is generally hard for banks to lend more without compromising prudent loan underwriting standards.
* BUSINESS
* APRIL 7, 2010, 12:38 P.M. ET
Greenspan, Panel Spar Over Fed’s Role
By MICHAEL R. CRITTENDEN And JOHN D. MCKINNON
Former Federal Reserve Board Chairman Alan Greenspan is sworn in during a hearing before the Financial Crisis Inquiry Commission.
WASHINGTON—Former Federal Reserve Chairman Alan Greenspan urged U.S. policy makers Wednesday to place significantly higher capital and collateral requirements on the financial-services industry, warning of the likelihood of future financial crises if steps aren’t taken to address “too big to fail” firms and the inability of the private market and regulators to predict major risks.
Mr. Greenspan, appearing before the Financial Crisis Inquiry Commission on Capitol Hill, said that the events of the past few years are likely to be viewed “as the most virulent global financial crisis ever.”
Putting in place new standards to make the financial system more resilient is necessary, he said, because future financial crises are likely and will involve financial products “which no one has heard of before, and which no one can forecast today.”
Later Wednesday, the bipartisan commission will hear testimony from former and current executives of Citigroup Inc. A former top Citigroup underwriting executive had warned company leaders of “extreme risks” and potential large losses in the company’s subprime-mortgage approval process beginning in 2006, according to prepared remarks.
Mr. Greenspan’s testimony before the bipartisan commission has been highly anticipated, in part because of the criticism that has been heaped on him and the Fed under his tenure for its role in setting the stage for the financial tumult that occurred after he left the central bank in 2006.
Lawmakers on both sides of the aisle, including those intimately involved in efforts to overhaul regulation of U.S. financial markets, have blamed the Greenspan-era Fed for not doing enough to protect consumers and identifying potential risks to the economy from the booming mortgage market.
“Was there just a reluctance to regulate, a belief that regulation was not the right tool?,” Phil Angelides, who is chairman of the financial crisis panel, asked Mr. Greenspan. “You could’ve, you should’ve and you didn’t” do enough to regulate, Mr. Angelides continued.
Commission member Brooksley Born, who chaired the U.S. Commodity Futures Trading Commission during the Clinton administration, was more blunt.
“The Fed utterly failed to prevent the financial crisis,” she said. “Failed to prevent the housing bubble, failed to prevent the predatory lending scandal.”
Mr. Greenspan responded that he “fundamentally” disagreed with Ms. Born’s contention, and countered that the Fed did take actions to address issues such as subprime lending. The Fed under his watch “was quite active in pursuing consumer protections for mortgage borrowers,” but was limited in its ability to enforce the guidance and rules it was offering.
“I consistently voted in favor of consumer-protection initiatives when they were brought before the board, and support the positions reflected in the various guidelines we issued over the past decade,” Mr. Greenspan said.
He also suggested that too many critics on Capitol Hill have developed “amnesia” about the pressure they put on the Fed to increase lending.
“I sat through meeting after meeting in which the pressures on the Fed to enhance lending were remarkable,” he said.
…
Journal Community
* Vote: Should the U.S. government declare that in the future, no company will be “too big to fail,” ending the expectation of taxpayer bailouts?
What good would announcing this do? The GSEs were not supposed to be covered by a TBTF guarantee, but when they failed, it turned out they were backed by the full faith and credit of the U.S. Treasury.
The only potential remedy is to break up any firm that is TBTF, before it collapses and burdens sovereign governments with unrepayable bailout costs.
Mr. Greenspan responded that he “fundamentally” disagreed with Ms. Born’s contention, and countered that the Fed did take actions to address issues such as subprime lending. The Fed under his watch “was quite active in pursuing consumer protections for mortgage borrowers,” but was limited in its ability to enforce the guidance and rules it was offering.
Just wondering - does pushing ARMs as a method of affordability - during a time of extremely low interest rates no less - fit under his description of “pursuing consumer protections for mortgage borrowers”?
I’d love to see someone from Congress ask him that question, using that exact wording.
‘…does pushing ARMs as a method of affordability - during a time of extremely low interest rates no less - fit under his description of “pursuing consumer protections for mortgage borrowers”’
That may have constituted a portion of the 30 percent of the time he was wrong.
P.S. The Fed is part of the government, not an independently operated private bank as some have asserted.
Greenspan: ‘I was right 70% of the time’
By Ben Rooney, staff reporterApril 7, 2010: 12:57 PM ET
NEW YORK (CNNMoney.com) — Alan Greenspan acknowledged Wednesday that mistakes were made during his long tenure as chairman of the Federal Reserve, but he argued that the low interest rate policy he championed at the central bank didn’t inflate the housing bubble.
In testimony before the Financial Crisis Inquiry Commission, Greenspan said the recent financial meltdown was possibly “the most severe in history.” He admitted that regulators failed to grasp the severity of the crisis, but he maintained that his policies and predictions were correct most of the time.
“When you’ve been in government for 21 years, as I have been, the issue of retrospect and what you should have done is a really futile activity,” Greenspan said. “I was right 70% of the time. But I was wrong 30% of the time, and there were an awful lot of mistakes in 21 years,” he added.
…
LOL. 70% isn’t exactly a stellar track record. This isn’t baseball. That 30% of the time you’re wrong can cause big problems - like huge housing bubbles.
P.S. The Fed is part of the government, not an independently operated private bank as some have asserted.
As evidenced by their web site being www dot federalreserve dot gov.
Nevertheless - they get the perk of being a government agency, in terms of the ability to control things, but also the perk of being a private entity, in terms of not being subject to audits, oversight, etc. About the only “oversight” they’re subject to is a vetting of the governors’ appointments - which basically amounts to nothing more than a rubber stamp after they’ve confirmed the person isn’t a child molester. (Apparently they don’t check for tax evasion)
April 7, 2010, 1:02 p.m. EDT
Greenspan: Subprime loans did not cause financial crisis
Inquiry commission says former Fed chief ignored warnings about subprime
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — An insatiable global appetite for packaged pools of high-risk mortgages was a significant contributor to the financial crisis, not the subprime loans themselves, former Federal Reserve Chairman Alan Greenspan told a government-appointed inquiry panel in defense of his tenure on Wednesday.
“In my judgment, the origination of subprime mortgages — as opposed to the rise in global demand for securitized subprime-mortgage interests — was not a significant cause of the financial crisis,” Greenspan told the Financial Crisis Inquiry Commission, which is conducting a series of hearings and investigations into what brought the economy to the brink in September 2008.
Dimon stands his ground
J.P. Morgan chief’s stance on financial regulation has shifted since the early days of the financial crisis, when he rallied Wall Street to support the government’s rescue efforts. Robin Sidel and Evan Newmark discuss the shift.
Greenspan was criticized for holding the central bank’s interest rates too low for too long, contributing to the crisis, and also for failing to use the Fed’s responsibility to protect consumers from subprime and other problem mortgages that were a key contributor to the financial crisis.
Specifically, the former Fed chief — and his successor Ben Bernanke — have been criticized for failing to employ the central bank’s authority to supervise, write and enforce strong consumer-protection regulations for mortgage and credit-card products.
“Why in the face of all [the subprime lending] did you not move to contain abusive subprime lending?” asked the panel’s chairman, Phil Angelides.
…
When I was in school, 70% was a D minus.
Here’s a guy who noticed that Greenspan was “ARMed” and dangerous in 2004.
http://www.slate.com/id/2096313/
Great find.
Greenspan should be constantly reminded of that.
Not only that, but I find it highly suspicious that any economist, let alone him, would recommend ARMs at such a time. I smell a big honkin’ rat. This is part of the reason why I don’t think the housing bubble was an accident. I think at some level it was planned, and he was in on it.
Agreed.
Sam has a variable rate loan, the interest rate has gone up from 3% to 4%. Expressed as a percentage, how much has the interest portion of his payment increased?
I’ve argued this with people til I was blue in the face and most can’t comprehend it. My argument was that if a 30 year fixed rate goes from 5% to 8% the payment isn’t going up only 3%. I’ve also pointed out that if you buy at historically low rates the odds are slim that you’ll be able to refinance later and save money.
It is more dramatic if you pick a payment ($2000 a month is a lot, but works well on the numbers) and then show how much house it will buy at 5% and 8%, ignoring the principal payment.
I did it for my parents early on when I was trying to explain to them (especially my mother) why I had decided not to buy until interest rates went up. The difference between the $480K and the $300K was sufficiently dramatic for them to understand why I wanted to keep my hard earned savings dry.
And how does this affect things when Sam is “Uncle Sam”? Those numbers are the last year for the 10 year treasury bond. As BILA pointed out yesterday, the 52 week note is even worse, with a 50% increase in just 4 weeks!
For reference - CBO’s projected 10-year T-note rate (projections from two months ago):
2010: 3.6%
2011: 3.9%
Being that we’re flirting with 4.0 already, I believe that’d be a big “oops”.
Prediction: more QE around the bend.
They also said that if interest rates are just 1% higher than projected over the 10-year period 2010-2020, it would result in an additional $1.2 Trillion debt, due to the higher servicing costs.
This is in part why I think we’re going Japanese all the way - interest rates will stay low for a long, long time.
Agreed PM, QE and/or equity market supression. Recycle the playbook, diminishing returns.
I bought a small amount of treasuries today on that very thought.
Same here - I’ve been trying to find a home for some retirement savings, after being out of the market for a while. I decided to take the plunge if the 10-year ticked up, which it did - so I did.
I may get burned by inflation, but I’m also big on diversification, so so be it. I don’t mind playing both sides of the fence. It stinks being in cash, and I’m not about to go all in on stocks or corporate bonds right now.
touche….missed that point
Sam has a variable rate loan, the interest rate has gone up from 3% to 4%. Expressed as a percentage, how much has the interest portion of his payment increased?
I have often advocated that precisely this question should be asked of anyone applying for an ARM. Wrong answer means no mortgage. This simple mechanism would have gone a long way toward preventing the housing bubble.
Greenie the Revisionist Revisited:
AP - WASHINGTON—Former Federal Reserve Chairman Alan Greenspan urged U.S. policy makers Wednesday to place significantly higher capital and collateral requirements on the financial-services industry, warning of the likelihood of future financial crises if steps aren’t taken to address “too big to fail” firms and the inability of the private market and regulators to predict major risks.
This is the same Alan Greenspan that consistently put forward positions that did exactly the opposite. Let’s go back and revisit history:
•Sweep accounts made a mockery of reserves in the banking system - an “innovation” that Alan Greenspan put in place.
•The merger of Citi and Travelers, an act that was black-letter unlawful at the time it was entered into, was passed over by The Fed (even though they had authority to block it) and Greenspan then supported Gramm-Leach-Bliley that retroactively made the merger lawful.
There’s more, but that’s enough - in short, Greenspan is a blatant, black-letter liar. He personally put forward much of the so-called “innovations” that not only allowed new products into the market but he personally destroyed the capital and collateral requirements that formerly protected banks from ruinous losses as a consequence of bad lending decisions.
Now, having witnessed the acts of his own hand blowing banks to little bits, he wants to go back and revise history, ignoring his own role in setting forward the conditions that made the mess occur!
Puppies often go hide in shame after taking a dump on your carpet, but it takes a senile old coot like Greenspan to sit there and intentionally ignore the smelly pile that he emitted and which sits directly under his nose.
(From K. Denninger)
According to your Federal Reserve Chairman, deficits don’t lead to inflation. Huge sigh of relief heard the world over. Oh yea, gold went up $18 U.S and Cdn, now that were at par.
As bond yields rise back to normal levels over the next several years, you will see a reallocation of money that would have lent support to stock prices into the bond market. In other words, the low rate pillar of support for stocks is likely to end over the next decade or so.
Market Snapshot
April 7, 2010, 2:21 p.m. EDT
U.S. stocks pare loss amid Treasury auction, Bernanke
U.S. stocks end modestly up after Fed’s words
Goldman gets sensitive
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks cut their losses on Wednesday after the Treasury’s 10-year note auction drew solid demand and Federal Reserve Chairman Ben Bernanke delivered his most cheery outlook since the financial crisis began.
The government auction of $21 billion in 10-year notes found a receptive audience.
“Buyers came out as the highest yields since last summer proved too tempting,” said Peter Boockvar, equity strategist at Miller Tabak.
…
So this year the plan is to move into treasuries when times are good, and out of them as a safe haven? I wish they’d publish when they make these changes. It’s confusing.
I think its because of Greece and its problems treasuries are a “safe Haven”
stock market looked down last I checked
April 7, 2010, 2:21 p.m. EDT
U.S. stocks pare loss amid Treasury auction, Bernanke
U.S. stocks end modestly up after Fed’s words
P.S. - LOL. Didn’t realize the stock market closed before 2:21pm these days!
Houston - it appears we have a negative on that upward trajectory.
“According to your Federal Reserve Chairman, deficits don’t lead to inflation.”
As long as people are willing to buy your debt - i.e. don’t think there’s a good chance you’ll default, they don’t.
When that day comes though that they do - then you’re screwed. By then it’s too late.
We shall see. There’s only so much existing money in the world equity well that can be tapped, before the printing presses have to be put into service full bore.
Doesn’t whether you “move your money” when rates rise depend on what asset class in which your money is currently parked?
For instance, stock market funds and long-term bond funds are likely to get hammered as rates rise, while money market funds and other short-term instruments will only do better going forward with no loss of principle.
Chuck Jaffe
April 7, 2010, 1:46 a.m. EDT
What to do when the Fed puts up a fight
Commentary: No need to move your money if interest rates rise
Three questions to ask of a top-performing fund
Goldman gets sensitive
By Chuck Jaffe, MarketWatch
BOSTON (MarketWatch) — It hasn’t been so long since the last time interest rates went up, but it sure feels that way.
So with many investors now convinced that a rate hike is in the offing, it makes sense to consider what changes, if any, you should make to your portfolio. Truth is, one rate hike — if and when it happens — is a headline event, not something that demands immediate reaction. Only after a second move, or maybe a third, will rising rates warrant a response from the average investor.
Where to invest when rates rise
As the economy improves, rate hikes loom, says Michael Cuggino, manager of the Permanent Portfolio fund family. He tells Jonathan Burton how stock and bond investors can blunt the impact of rising rates and take advantage of global growth.
To understand why, look at two important factors: inflation and the Federal Reserve.
While there are plenty of inflation fears for the economy, it’s hard to have much inflation at a time of high unemployment and no wage pressure to drive costs up. Inflation will come later, rather than sooner, as the economy needs to unwind some other concerns first.
Then there is the Federal Reserve, which has a long history of making protracted rate moves, but no recent history of short, small, one-time steps.
Investors may remember the 2004-2006 stretch, where the Fed responded to low rates by raising them at every meeting like clockwork. What you don’t find from the Fed is a “one-and-done,” a move to show some backbone — and perhaps a willingness to step back from the extreme edge of near-zero rates — without any follow-up.
Just as important, there is the very real concern of how rising rates could derail economic recovery. The 10-year Treasury yield has been hovering near 4% recently; it could jump to 4.25% if the Fed raises other rates and the market responds broadly. But a 10-year Treasury with a yield much above 4.25% could hamper the budding recovery in the housing market, which could stall overall growth.
“There’s a lot of people talking about how rates are going to go up, but I’m not a real believer that we’ll see rates going much higher and staying there,” said Les Nanberg of Cornerstone Wealth Management in Boston, the former chief economist and head of fixed income investments at mutual-fund giant MFS. “These are not the conditions that have driven rate moves in the past, so I don’t think you want to overreact to a small rate increase, if one happens soon.”
Indeed, for many investors, the impact of a rate increase will be negligible and temporary. Investors in money-market funds, for example, can expect that fund management will keep the bulk of a rate hike for itself, recapturing fee waivers that have allowed it to deliver positive returns while rates were practically zero. See related story on money-market fund fees.
Peter Crane of Crane Data, which publishes Money Fund Intelligence, said that money fund costs have dropped to 0.25% from roughly 0.4% thanks to waivers that funds put in place in order to keep returns positive. If there is a rate hike, he expects the funds to grab back most of their pay before passing it along to investors.
“Of a quarter-point hike, investors will probably split that with the fund company,” Crane said. “It will take two hikes to remove the fee waivers entirely, assuming quarter-point increases. The Fed has never made just one increase — they have always taken one step and then another and another — but investors won’t really start to feel a difference in their money-fund returns until you get to the second increase, or maybe the third.”
Bond funds pinched
By comparison, investors in bond funds could feel the pinch of a rate hike immediately. Bond funds suffer when rates are on the rise. When yields go up, bond prices fall, and since the fund must be priced at the end of each day based on what it could get if it sold all of its holdings, those falling bond prices tend to throw bond funds for a loop — an unpleasant surprise for safety-conscious investors.
…
Giant bloodsucking vampire squids have feelings, too.
MarketWatch First Take
April 7, 2010, 10:50 a.m. EDT
Goldman hedges in its shareholder letter
Commentary: The besieged bank fails to address the charges against it
Goldman gets sensitive
By MarketWatch
NEW YORK (MarketWatch) — The mounting criticism against Goldman Sachs Group Inc. has struck a nerve, but the bank’s response misses the point.
In its annual letter to shareholders, Goldman (GS 177.35, +4.45, +2.57%) and its chief executive, Lloyd Blankfein, are on the defensive. Blankfein defends the bank’s moves in securing its payout from American International Group Inc. /quotes/comstock/13*!aig/quotes/nls/aig (AIG 36.91, +1.00, +2.79%) and states the firm has always placed its clients’ needs first and suggests that it never bet against them. Read the Goldman letter.
The latter assertion is somewhat disingenuous. Blankfein appears to be referring to charges that Goldman made bets against mortgage securities it underwrote, a claim laid bare in January at the Financial Inquiry Commission.
“It sounds to me a little bit like selling a car with faulty brakes, then buying an insurance policy on the buyer of those cars,” the commission chairman, Phil Angelides told Blankfein during his testimony.
The question of whether Goldman was trading against its clients comes down to who the client is. Is it the bank that sold the mortgages to Goldman to be packaged and securitized? Or is it the homebuyers whose mortgages were the underlying securities? Is it the buyers of those securities? See story on Goldman letter.
The answer isn’t entirely clear. Blankfein has argued that Goldman tries to make a market in such securities. Sometimes, that means taking the short side of a trade for a client.
The J.P. Morgan chief’s stance on financial regulation has shifted since the early days of the financial crisis, when he rallied Wall Street to support the government’s rescue efforts. Robin Sidel and Evan Newmark discuss the shift.
That’s probably why Blankfein can tell shareholders that Goldman never trades against its clients with a straight face. It’s also why the securitization market is faulty. Consumer loans are passed from institution to institution. There’s no ownership or accountability.
…
Here is a good one:
http://www.cnbc.com/id/15840232?video=1462562171&play=1
All I can say is Thank Goodness for Mr Magoo! It wasn’t his fault. Heck, he says so himself.
The Idiot.
Roidy
Lowenstein: Thanks to Greenspan and Bernanke, The Next Crisis Could Be “Even Scarier”
Apr 07, 2010 by Peter Gorenstein in Investing, Newsmakers, Banking, Politics.
Update: Testifying before the Financial Crisis Inquiry Commission on Wednesday, former Fed chairman Alan Greenspan admitted to making “an awful lot of mistakes” and being “wrong 30% of the time.” Still, Greenspan (again) denied the Fed’s monetary policy or lax regulatory oversight were the primary causes of the real estate boom and bust earlier this decade.
From the global savings glut to securitization of mortgages and the U.S. government’s push for wider home-ownership via Fannie Mae and Freddie Mac, “Greenspan blamed a litany of other parties and historical events for the meltdown but accepted no responsibility for himself or the Fed,” The AP reports.
But crisis panel chairman Peter Angelides didn’t let Greenspan off the hook: “Why…did you not act to contain abusive, deceptive subprime lending?” asked Angelides, a former California state treasurer. “You could’ve, you should’ve and you didn’t” act to stop predatory lending practices.
Editor’s note: Ahead of the testimony, Tech Ticker spoke with author and longtime Greenspan critic Roger Lowenstein about “the Maestro’s” role in the credit crisis.
Earlier: Alan Greenspan is on Capitol Hill today testifying in front of the Financial Crisis Inquiry Commission. The former Federal Reserve Chairman Alan Greenspan has come under increased scrutiny for his failure to anticipate the housing bubble. Roger Lowenstein, author of The End of Wall Street, says the criticism is deserved.
In Lowenstein’s view Greenspan made several key mistakes.
– Too Low for Too Long: “He never said ‘gee maybe we shouldn’t have left rates at 1% three years into a recovery’ when housing is rising at double digit rates.”
– Missed the Bubble: “This idea that you should prick a bubble before it gets too big just totally ran against his grain.”
– The Market is Always Right: The root of the problem is that Greenspan “believed deeply in the philosophy that if markets do it, it’s right,” Lowenstein says. Current Federal Reserve Chair Ben Bernanke deserves some blame for continuing Greenspan’s policies, he says. “Ben Bernanke is absolutely Greenspan light.”
What’s even more troubling is that the solution to the crisis, engineered by Washington, may be even more catastrophic, Lowenstein says. “What the government may have done is not solve the Wall Street crisis but may have just assumed Wall Street’s debt.”
Which brings up the real possibility “the next [crisis] could be centered right in Washington [and] could be even scarier,” Lowenstein warns.
Clap clap clap.
On the money.
Yes.
It’s Impossible to “Get By” In the US
While the market cheers on the fantastic job “growth” of March 2010, the more astute of us are concerned with a growing tide of personal bankruptcies. March 2010 saw 158,000 bankruptcy filings. David Rosenberg of Gluskin-Sheff notes that this is an astounding 6,900 filings per day.
This latest filing is up 19% from March 2009’s number which occurred at the absolute nadir of the economic decline, when everyone thought the world was ending. It’s also up 35% from last month’s (February 2010) number.
Given the significance of this, I thought today we’d spend some time delving into numbers for the “median” American’s experience in the US today. Regrettably, much of the data is not up to date so we’ve got to go by 2008 numbers.
In 2008, the median US household income was $50,300. Assuming that the person filing is the “head of household” and has two children (dependents), this means a 1040 tax bill of $4,100, which leaves about $45K in income after taxes (we’re not bothering with state taxes). I realize this is a simplistic calculation, but it’s a decent proxy for income in the US in 2008.
http://www.gainspainscapital.com/index.php?option=com_content&view=article&id=80:its-impossible-to-get-by-in-the-us-
It’s no secret, household purchasing power is declining. Also floating around the news today is a story about how older workers are crowding out newbies from the workforce - further reinforcing that trend.
Are today’s specuvestors taking note that all signs inidicate the continuing erosion of household purchasing power when they’re snapping up all those sweet deals?
Only thing that may be wrong is he uses household income instead of personal income. Median household income is about $50K, but two median personal incomes average higher.
..The overall median personal income for all individuals over the age of 18 was $25,149 ($32,140 for those age 25 or above) in the year 2005.
The overall median income for all 155 million persons over the age of 15 who worked with earnings in 2005 was $28,567.
http://en.wikipedia.org/wiki/Personal_income_in_the_United_States
Any two of those “average” people together make more than 50K.. possibly as high as $64K a year for those 25 years and above.. and they will have many thousands of dollars left over.
Homeowners with 2 kids “should be” over 25 y/o… i’m sure most are, not counting the last few crazy years.
—–
But still.. to think that the average household can afford to buy an average home, drive the car, ahve health insurance, etc and pay all the bills and have anything left over is not all that bad.
In 2008, the median US household income was $50,300. Assuming that the person filing is the “head of household” and has two children (dependents), this means a 1040 tax bill of $4,100, which leaves about $45K in income after taxes (we’re not bothering with state taxes). I realize this is a simplistic calculation, but it’s a decent proxy for income in the US in 2008.
No.
Social Security
State Taxes
Local Wage Taxes
Property Taxes
Sales Tax
etc.
The average middle class wage earner will be lucky to take home 50% of his income that he can actually spend on something.
People are running out of savings and are having to face the fact that as expenditures exceed income they have no other choice than to file for bankruptcy.
Shrinking paychecks have a way of making that happen. My carpool companion’s husband has been unemployed for over a year and they are stuck in two upside down car loans they can longer afford. They have burned through their meager savings hoping for a miracle (a new job for him) and are now out of cash.
The beat goes on.
“they have no other choice than to file for bankruptcy”.
Yes, and there is a rapidly increasing amount of people doing just that . Little attention is being paid to this by the MSM.
And for good reason. The last thing they want is for Joe 6 Pack to walk away from his CC debt via Chapter 7.
Bernanke: Economy Growing Again, but We’re Not Out of the Woods Yet- AP
Federal Reserve Chairman Ben Bernanke says problems in the housing market and high unemployment are the biggest economic challenges the nation faces. After suffering through the worst recession since the 1930s, the economy seems to have stabilized and is growing again, Bernanke says. But he adds, “We are far from being out of the woods.”
Correct. We are in that part of the woods, where if the entire world economy collapsed with a bang, the MSM certainly would not hear it; could never ever report on it, and should be expected to lie about it, until the entire woods are cut down for pulp for propaganda paper puffs and Fantasy Reserve Notes.
“…the average length of unemployment, 31 weeks, is at its highest level since 1948. There were a total of 2.3 million unemployed college graduates in March 2010, 1.45 million more than in March 2007, with heavy layoffs in white-collar sectors such as finance.
In the long run, the drop in parental aid could make young adults a more financially resilient generation, like children of the Great Depression. But for now, economists worry that without parental cash, young adults may put off entering the housing market, settling into career paths and having families.
“Now, not only do parents no longer have the money to help their children out, but banks will no longer lend to home buyers without the income to support repayment,” says Cheryl Russell, a demographer and author of “Americans and Their Homes: Demographics of Homeownership.”
The rate of home ownership among people ages 25 to 29 fell to 37.7% last year, from a peak of 42% in 2006, according to the U.S. Census. Home ownership for those under 25 fell to 23.3% from 26% in 2005, the lowest rate for any age group.
The Juggle
What’s your plan on paying for your kids’ college education? Join the discussion at the Juggle, the WSJ’s work and family blog.
Indeed, the bank of Mom and Dad is closing at a time when young people are having trouble borrowing from traditional lenders. Some 22% of young people between the ages of 18 and 34 said they’ve been turned down for a mortgage, loan or credit card in the past year, according to a February survey from FindLaw.com, a legal marketing and information site. That’s double the percentage of any other age group in its survey.
As a result, many young people are now moving home to save on rent. About 21% of young adults say they’ve either moved in with a friend or relative, or had a friend or relative move in with them because of the economy, according to a study from the Pew Research Center.”
Ben B. sez lenders need to start allowing loans to flow to those with good credit, again. He must think that that’s the obstacle to getting us back to the bubble days.
Consumer borrowing falls $11.5 billion in February
Consumer borrowing declines in February, reflecting weakness in credit cards and auto loans
WASHINGTON (AP) — Consumer borrowing fell again in February, reflecting weakness in credit cards and auto loans. It marks a setback to hopes that consumers are beginning to feel more confident and will start spending more.
The Federal Reserve said Wednesday that borrowing declined by $11.5 billion in February, surprisingly weaker than the small $500 million gain that economists had expected. The February decline was the 12th decrease in the past 13 months as consumers slash borrowing in the face of a deep economic recession and high unemployment.
In January, borrowing rose by $10.6 billion, a gain that had broken a record 11 consecutive declines.
In percentage terms, the January increase represented a rise of 5.2 percent at an annual rate while the February decline marks a drop of 5.6 percent.
The February weakness reflected a sizable 13.6 percent drop in revolving loans, the category that includes credit card debt, and a smaller 1.6 percent decline in nonrevolving loans, the category that covers auto loans.
A revival in consumer borrowing and spending is seen as crucial to providing support for the overall economy, which is still struggling to emerge from the worst recession since the 1930s.
Federal Reserve Chairman Ben Bernanke said Wednesday that the economy seems to have stabilized and is growing again but threats remain.
The Latest Gold Fraud Bombshell: Canada’s Only Bullion Bank Gold Vault Is Practically Empty
Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA’s Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says “What shocked me was how little gold and silver they actually had.” Lenny describes exactly how much (or little as the case may be) silver was available - roughly 60,000 ounces. As for gold - 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: “The game ends when the people who own all these paper obligations say enough and take physical delivery, and that’s when the mess will occur.”
Also note the interesting detour into what Stephan Spicer of the Central Fund Of Canada, said regarding his friend at a major bank, who wanted access to his 15,000 oz of silver, and had to wait 6-8 weeks for its to be flown in from Hong Kong.
It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders’ willingness to be diluted into perpetuity - when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.
http://www.zerohedge.com/article/latest-gold-fraud-bombshell-canadas-only-bullion-bank-gold-vault-practically-empty
Do you think this is where Aladinsane was keeping his gold?
This was a disappointing report, showing that households are continuing to pare back credit,” economists at Barclays Capital wrote in a research note.
In percentage terms, the January increase represented a rise of 5.2 percent at an annual rate while the February decline marks a drop of 5.6 percent.
The February weakness reflected a sizable 13.6 percent drop in revolving loans, the category that includes credit card debt, and a smaller 1.6 percent decline in nonrevolving loans, the category that covers auto loans.
A revival in consumer borrowing and spending is seen as crucial to providing support for the overall economy, which is still struggling to emerge from the worst recession since the 1930s.
Federal Reserve Chairman Ben Bernanke said Wednesday that the economy seems to have stabilized and is growing again but threats remain.
“We are far from being out of the woods,” Bernanke told a business audience in Dallas. “Many Americans are still grappling with unemployment or foreclosure or both.”
Economists are hoping that consumer borrowing will stabilize in coming months and resume growing although they caution that the rebound will be restrained by tighter credit restrictions imposed by many banks in the wake of the financial crisis.
Consumers who would like to borrow are finding it hard to get credit at banks, who are being pushed by regulators to bolster their lending standards.
The $11.5 billion decline in consumer borrowing in February pushed total borrowing down to $2.45 trillion, 4 percent below where it was a year ago. The Fed’s measure of consumer credit excludes home mortgages and other loans secured by real estate.
In summary
Wages declining
Taxes increasing
Fees increasing
Services decreasing
gas inflation based on market manipulation
and now continued decline in borrowing.
A winning combination to stimulate consumer spending.
This was a disappointing report, showing that households are continuing to pare back credit,” economists at Barclays Capital wrote in a research note.
One man’s disappointment is another man’s encouragement. Sounds like a great report to me!
P.S. I hate how “credit” has now become a euphemism for “debt”.
Households don’t have credit. Households have debt. Banks give credit.
Robert Toll was right about more people needing to live with their parents, but way off on the reason. He thought high housing costs would force this development; in fact, it is the recession.
In economic terms, Toll’s conjecture was based on ever-increasing housing demand forcing up prices. If U.S. households have shrunk by 1.2m, I guess that translates into 1.2m fewer housing units needed to meet demand?
Can anyone predict the fundamental impact of this sizable contraction in the number of U.S. households on housing demand and prices? (I can…)
April 7, 2010, 4:08 p.m. EDT
Number of U.S. households falls by 1.2 million
Recession forces adult children to stay with parents, more families to double up
* Consumer debt falls by $11.5 billion in February (3:23p)
* Credits can bring you money at tax time (12:24p)
* Legacy airlines lose home-front to budget carriers (1:42p)
By Amy Hoak, MarketWatch
CHICAGO (MarketWatch) — The number of American households dropped by an estimated 1.2 million between 2005 and 2008, even though the population increased by 3.4 million in 80 of the largest metropolitan areas during that time, according to a new study by a professor at the University of Southern California.
More young people are living with their parents instead of moving out, postponing the creation of their own households. Meanwhile, more families are combining households for economic reasons, including the loss of a home due to foreclosure, according to Gary Painter, associate professor in the School of Policy, Planning and Development at USC.
“With such a significant drop in households nationwide, it is clear the most recent recession impacted individuals’ decisions to move out on their own and caused many Americans to join already formed households,” Painter said in a news release Wednesday.
..
He thought high housing costs would force this development; in fact, it is the recession.
Well…in a way, isn’t it still high housing costs? Yeah, he probably thought it would be even higher housing costs, but if housing had fallen in price to the point that it should have by now, wouldn’t at least some of those people be living in houses instead of with their parents?
“Well…in a way, isn’t it still high housing costs?”
Sure. If Uncle Sam (including the Fed) were not currently propping up housing prices from behind the curtain, they would adjust on their own to affordable levels. Instead, home prices are artificially propped up, and at least some would-be buyers are likely responding by living with Mom and Dad.
The daughter of some family friends moved (with her husband and child) into her parents’ home. Reason, according to my mother, was that they were saving up for a house.
This was before Dad died. I can’t help thinking that, after he passed, Mom appreciated having her daughter and family around the house. Perhaps they’re still there. My mother hasn’t mentioned this family lately, so I don’t know what happened.
My first thought is, yet another HBB prediction come to pass.
Winning the mortgage modification lottery
“Joaquin Guzmann bought his Long Beach, Calif., house 23 years ago for $137,000 but has since struggled financially.
He moonlighted from his ground-servicing job with Continental Airlines and took out second mortgages and cash-out refinancings. By last year, his mortgage had ballooned to more than $518,000, counting late fees.”
Look at the two examples of borrowers in this article who got help. Neither are deserving of this assistance. And no mention of what Joaquin did with his winnings.
That is OUTRAGEOUS! He’ll get over $381,000 TAX FREE! And he’s a friggin’ “victim”?
Why can’t the average taxpayer see what these folks are getting away with?
My favorite news source, TMZ, has this item on Nick Cage’s financial problems.
http://www.tmz.com/2010/04/07/nic-cage-home-foreclosure-bel-air-bankruptcy-debt/
Seems he owes $17M on this house that he purchased for $6.5M. I’m wondering if the “deadbeat specu-vestor tax relief act” which exempts forgiven mortgage debt from income tax will apply in this case? If it does he’ll have been able to pocket $10.5 million–TAX FREE!
Posting really late in the day, but thought I’d share an observation…
I’m getting a lot of calls+emails lately from head hunters and recruiters. These seem to be solid leads. I’m not sure if it’s seasonal, if things are looking up in the economy, or what exactly. But I haven’t been actively searching - just have my resume posted on monster and dice.
Finished up a round of on-site interviews today, and have another next week (my current gig is a contract job that will be winding down soon), so these are solid job openings, not just companies testing the water.
Any one else notice the same?
I have two good friends that have been looking for jobs for several months now - just the past two weeks they all of the sudden have lots of new things opening up.
I’m not big on anecdotal evidence, but there it is.
Though FWIW - mostly these are in the DC area, where things are doing well relative to the rest of the country.
Anecdotal evidence is where it starts, though.
That’s very good news, guys. As much as I want housing prices to fall, it would be great to see that happen concurrent with more jobs and stable/rising wages.
Good luck, drumminj!