Bits Bucket For April 18, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Wow, it’s an early start to Sunday…
Whoh, a first comment from the guy who’s usually one of the latest posters (west coast?) It really must be early..
I’m in Boulder, CO. I just usually don’t get on until lunchtime or toward the end of the day. In the case the Sunday thread was posted before SNL was over.
RECOVERY DOT GOV
Track the money
Recovery dot gov is the U.S. government’s official website providing easy access to data related to Recovery Act spending and allows for the reporting of potential fraud, waste, and abuse.
Good find!
Home / Markets / Business Leaders
Thursday, April 15, 2010
Bullard: Look to Wall Street as Economic Recovery Indicator
By Peter Barnes, Senior Washington Correspondent
FOXBusiness
A top Federal Reserve official said Thursday he believes the recent jump in stock prices reflects fundamental improvements in economic conditions and is not sign of an “asset bubble,” as some economists fear.
With major stock indices up more than 70% since their lows in March 2009, they are “getting closer to the level (they were) at, say, in January of 2007, before we really got going in the crisis,” said James Bullard, president of the Federal Reserve Bank of St. Louis, in an interview with FOX Business Network. “And I think that is an encouraging sign because it suggests that what we got was a temporary dip and not a permanent decline.”
“If you look at the decline in Japanese stock prices in the late 80s and early 90s, they peaked out, went down, and never came back. That really is a bubble, when it never comes back,” Bullard said. “But here, we are making our way back and that makes me think the financial crisis is more a temporary event, a temporary disturbance but the economy can return to its balance growth path.”
…
Yet another top government official getting it completely wrong.
It’s never a bubble if you’re personally invested in it.
You’d think in his line of work at some point in the past he’d have looked at a chart of what happened in the great depression.
Bill Clinton getting it wrong too!!!!
April 18 (Bloomberg) — Former President Bill Clinton said he should have pushed for regulation of financial derivatives when he was president, rejecting the advice of top economic advisers Robert Rubin and Larry Summers.
The argument was that derivatives didn’t need transparency because they were “expensive and sophisticated and only a handful of people would buy them,” Clinton said on ABC’s “This Week” program. “The flaw in this argument was that first of all, sometimes people with a lot of money make stupid decisions and make it without transparency.”
“Even if less than 1 percent of the total investment community is involved in derivative exchanges, so much money was involved that if they went bad, they could affect 100 percent of the investments,” Clinton said. The show was taped yesterday for broadcast today.
Most of the derivatives are basically harmless. Of course, that doesn’t mean these shouldn’t be regulated along with the ones that aren’t harmless. Now, transparency in this market will cause a catastrophic decline … in trading commissions.
Oh, no!
Roidy
The argument was that derivatives didn’t need transparency because they were “expensive and sophisticated and only a handful of people would buy them,” Clinton said on ABC’s “This Week” program. “The flaw in this argument was that first of all, sometimes people with a lot of money make stupid decisions and make it without transparency.”
————————-
The main reason derivatives should be fully transparent is because they **hide risk premiums** in a given market.
For example, we didn’t see mortgage rates rise as risk was increasing (and many people in the mortgage industry were sounding the alarm) because the CDS market was *supposedly* absorbing that risk. If we could have seen what the CDS market was doing WRT certain investments, it probably would have been easier to see trouble coming at an earlier time.
Do you think he knows what the market PE ratio is?
I believe the historic average is 14 or 15. Last I heard, the PE ratio is currently in the low 20s. Not as high as the approx. 28 of the 1990s tech rally, but that one was based on exciting new technology.
This rally is based on… what?
Remember that “top govt official” who said subprime is contained? What was his name, the guy with the beard, oh yea Ben Bernanke.
Let me help you there Green Shoots.
Geithner says economy growing faster than expected
AP
WASHINGTON – Treasury Secretary Timothy Geithner (GYT’-nur) says the economy is growing faster than the Obama administration expected.
He tells NBC’s “Meet the Press” that the country is on the way to sustained job creation. But he acknowledges that unemployment may remain high, close to 10 percent.
Geithner says there’s more confidence in the business world, and he says the private sector is growing. He also says people are spending more.
He said he sees encouraging signs that should make Americans confident the country will emerge stronger.
that the country is on the way to sustained job creation ??
In what kind of Jobs ??
Geithner’s credibility is above reproach.
“Geithner says economy growing faster than expected”
Is there some kind of speed limit on economic growth? I am not suggesting that ‘faster than expected’ growth is likely to result in a speeding ticket, but rather that driving too fast increases the likelihood of a crash.
Sustained job creation AND persistently high unemployment?
How obvious does bullsh*t have to be before people recognize it? Please, this kind of stuff is insulting to the entire nation.
Its not BS…Sustained menial job creation and high unemployment for those with smarts….Mission Accomplished!
Hey I got my “Intern” less then minimum wage cash day job……it IS better then last year….
Well, congratulations, aNYCdj…sort of.
Are you still working at the internet radio station? (I think that’s where you were working.)
Geithner lives in the DC bubble and doesn’t get out of his bubble.
http://www.gold-eagle.com/editorials_01/seymour062001.html
Here are some “pompous prognosticators” from the 1929-1933 era, assuring the sheeple that all was well and the crisis was contained. Sounds very similar to what the Fed and the corporate-owned US financial media are cooing today.
Nice post Sammy…
Thanks, scdave.
This is either an example of the Fed believing its own lies or couching a lie within a claim. It’s really difficult to accept Bullard is this oblivious to the challenges on Main Street. After all, the Fed is continuosly pulling on asset price strings.
“…the Fed is continuosly pulling on asset price strings.”
Right. Their standard modus operandi appears to be pulling on the puppet strings to make it dance, and then marveling at the fact that the puppet has somehow turned into ‘a real boy.’
Green Shoots Theory -
“With major stock indices up more than 70% since their lows in March 2009, they are “getting closer to the level (they were) at, say, in January of 2007, before we really got going in the crisis… I think that is an encouraging sign”
How to Bet Your Money -
“The cycles and very simple fundamentals are enough to predict that 2011 will be worse than 2008. The medium-term cycles tell us that there is a very high probability of a serious bout of risk aversion beginning in the next five trading days and continuing into the week of May 3. This is likely to be most apparent in Europe, but it should also impact the equity and commodity markets around the world. The stream of strong economic and corporate news, plus continued benign inflation outside of Asia should assure us of a further risk rally, starting in May and running through July and possibly into early August. This decline after the August peak should be far more serious and we believe it will be the start of a major market rout continuing into the middle of 2011, at a minimum. The deflationary recession that will accompany this market collapse, at least in the developed world, will put extreme pressure on the Eurozone and the EMU structure. The second half of this decade will witness a very different world.” John Taylor of FX Concepts, biggest currency hedge fund in the world .
Housing construction points to market recovery
By MARTIN CRUTSINGER (AP) – 1 day ago
WASHINGTON — There were more signs of a moderate housing recovery Friday as the government reported an increase in construction and building permits.
The Commerce Department said the pace of new construction rose roughly 2 percent from February to March. That increase, however, was thanks to a 19 percent increase in apartments, which offset a 1 percent decline in home building.
But more encouraging, applications for building permits — a good gauge of future activity — rose 7.5 percent to the highest level since October 2008, when the financial crisis hit with full force.
The housing market is recovering from the worst downturn since the Great Depression. Construction is down by more than two-thirds from the unsustainable boom in late 2005 and early 2006, but has gradually recovered 30 percent from the bottom in April of last year.
Supply and demand.
Keep building, builders. I know that is all you know how to do, and it is the only way to recover even some money from land investments and material contracts. And fortunately, more supply in the face of less demand equals….
and it is the only way to recover even some money from land investments and material contracts.
A mega developer in our neck of the woods is trying to unload tens of thousands of acres of developed and partially developed land. So far there have been no takers, even thought he is asking less than half of peak prices.
And fortunately, more supply in the face of less demand equals….
Lowers prices and more jingle mail.
he is asking less than half of peak prices >>
Most that I see are around 25% of peak prices..
Lowers prices and more jingle mail.
Winnah winnah chicken dinnah!
“Housing construction points to market recovery”
Housing construction points to delusional thinking.
* APRIL 15, 2010, 11:01 P.M. ET
Fed’s Yellen: High-Tech Sector ‘On A Tear’ On Business Buying
SAN FRANCISCO (Dow Jones)–While other areas of the U.S. economy are recovering slowly, the high-tech industry is “on a tear” as businesses see the need to replace old servers and other information technology equipment, San Francisco Federal Reserve President Janet Yellen said Thursday.
Business IT spending soared at a rate more than 27% in the fourth quarter of 2009, adjusted for inflation, Yellen said during prepared remarks before an audience in San Francisco. She noted that this has been the tech sector’s fastest rate of growth since the “go-go years of the tech boom in the late 1990s.”
The San Francisco Federal Reserve’s Tech Pulse Index, which measures activity in the sector, grew at “a robust” 28% annual rate in the first three months of 2010, Yellen said.
-By Cassandra Sweet, Dow Jones Newswires; 415-269-4446; cassandra.sweet@dowjones.com
While other areas of the U.S. economy are recovering slowly, the high-tech industry is “on a tear” as businesses see the need to replace old servers and other information technology equipment
Even if that is true (they said the same thing a year and it didn’t happen), none of that gear is designed or built in the US anymore. Sure IBM and HP might show some increased sales and profits, but they won’t be doing any hiring or spending here at home. If anything they will continue to offshore and layoff workers. Wall St. 1, Main St. 0.
“… none of that gear is designed or built in the U.S anymore.”
Makes no difference, ours is a consumer-based economy not a production-based one.
Production is done elsewhere, consumption is done here at home. Low paid foreigners toil while we Americans get to loaf.
It’s all good.
IT spending doesn’t just mean buying hardware. It also means buying services which for the most part is comprised of US workers.
“It also means buying services which for the most part is comprised of US workers.”
Comprised of fewer US workers is more like it.
It also means buying services which for the most part is comprised of US workers.
Ever heard of Tata or Wipro? A lot of those “IT service” jobs are in India these days. Makes sense, as they are paid a fraction of what US workers are paid, whether it be software development, help desk, etc.
Everyone is super excited about “cloud computing” these days, just remember that the cloud HW can be located anywhere in the world ad the support staff will be there as well.
Not to burst your “bubble” but logically, cloud computing should be located wherever the quite-literal energy source is located.
As in, next to the dam that’s generating hydro-power or whatever.
But it’s a non-starter. No smart business ever outsources their key “computational ideas”. Forget it! It’s just a buzzword.
doing any hiring or spending here at home ??
Google is hiring like crazy…
The telcos are still cutting employees.
As are IBM, HP and all of the IT giants at least in the US. Most of them are still hiring like crazy in India and China.
Wall St. 1, Main St. 0
Main Street voted for this. Their complaints ring hollow.
Google is hiring like crazy…
How many jobs are they really creating at Google in the USA? A few thousand? I also now a few people who work there. You have to be the the cream of the cream of the cream of the crop. Having a freshly minted PhD helps.
the cream of the cream ??
No question about that…And don’t extrapolate anything from what I said…The job market around here is far from being healthy…
If I recall correctly, a lot of stimulus moneys was directed to the tech sector.
Who paid the bonuses for Wall Street and how it worked:
1. FASB (Financial Accounting Standards Board, home of Generally Accepted Accounting Priciples, or GAAP) capitulates and allows holders of OTC derivatives to value them at whatever they wish. This was done after intense political pressure and lobbying.
2. International investment firms begin strong mark up policies towards their crap inventory.
3. Profits from the mark-up of crap OTC derivatives by the international investment firms are recognized as trading income.
4. TARP (Troubled Asset Relief Program) money comes into the firms and goes out as bonuses to the management, trading department and general employees at obscene levels.
5. Stock and bond issues are made, to pay back TARP funds.
6. Therefore the money bonused out by the international investment firms were TARP funds; not real earnings, but false FASB- permitted mark up paper earnings through the trading department and declared as trading income.
7. The TARP money was paid back through the issue of stocks and bonds to the public, therefore the public paid the TARP back, not the financial institutions.
8. The obscene level of bonuses is because this game of converting false paper profit into cash into the bank account of the banksters and their merry crew is now game over. It was the last dip at the well of public funds laundered via TARP of the caved in FASB.
9. In the final analysis the public paid those obscene bonuses that were in truth, unearned.
10. Now that the all the horses with bags of dollars are out of the barn and in the next county, time to lock the barn door. (Financial “reform”; “charges” against Goldman.)
(From Jim Sinclair)
Increased spending in the tech sector?
I have friends and acquaintances who work in this filed and they tell me just the opposite.
So who, exactly, is spending this money? Of course, the article doesn’t say, does it.
Now pull the other one.
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Bloomberg
Home Sales, Goods Orders Probably Climbed: U.S. Economy Preview
April 18, 2010, 12:06 AM EDT
By Courtney Schlisserman
April 18 (Bloomberg) — Home sales and orders for long- lasting goods probably climbed in March, increases that enhance the odds the U.S. recovery will be sustained, economists said before reports this week.
The advances in durable goods would be the longest since 2005, highlighting how manufacturing is at the forefront of the economic rebound as global demand strengthens. The improvement in housing, meanwhile, is more dependent on help from the federal government as buyers rush to beat a deadline to qualify for a tax credit, indicating the industry will take time to rally.
“Business spending does seem to be picking up and I think that is going to be one of the key elements for the expansion,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut. On housing, “anything we get on the positive side would be an improvement.”
Reports last week showed builders turned less pessimistic in April and housing starts for March were at the highest level in more than a year.
You’re the most wack troll we’ve had yet.
Eddie, is that you?
Admit it, guys, you kinda miss Eddie.
At least Eddie could cut-n-paste properly.
And his favorite beer is Pabst Blue ribbon!
We must be mellowing. I miss the good old days when any troll who showed up would be clubbed like a baby seal.
As I’ve said, the only “recovery” going is that the patient is bleeding less because he’s already bled out.
You know, if the NAR were smart (fat chance, I know), they’d point their members to this blog to flood it with useless comments to shut it down.
PS: Ten month old Mini-chile had not one, but two green shoots this morning.
mini-chile is awesome. But you know that.
Thanks. He’s teething, which explains the third green shoot this afternoon.
When you hear “Voodoo Chile”, do you think of Hendrix, or SRV?
When I hear “Little Wing” I definitely think SRV.
When I hear “Little Wing” I definitely think SRV.
You should check out the cover done by Monte Montgomery - an Austin-based artist. Phenomenal guitarist. I’m sure you can find a link on youtube.
I’m not a big acoustic fan, but I gotta admit I was impressed. Especially when the distortion was used :-).
http://www.youtube.com/watch?v=Q8_6aa-TTvI
Thanks.
I gotta admit I was impressed
He is (was) phenomenal live. I haven’t seen him in many years, though. If you dig the guitar-playing there are some great live recordings out there.
Downtown condo developer defaults on loan
Vantage Pointe builder in talks with lender to work out extension
By Lori Weisberg, UNION-TRIBUNE STAFF WRITER
Thursday, April 15, 2010 at 7:25 p.m.
The Vantage Pointe in downtown San Diego.
Earnie Grafton / Union-Tribune
The Vantage Pointe in downtown San Diego.
The developer of downtown San Diego’s largest condominium project has defaulted on a $210 million construction loan but insists it plans to move forward with sales as it seeks to work out an agreement with its Canadian lender.
The 679-unit Vantage Pointe, which completed construction last year in the midst of the economic downturn, has struggled to launch a sales program following a major setback last year, when it was forced to return deposits to nearly 300 prospective buyers.
The mammoth high-rise at Ninth Avenue and B Street has since been restructured so that it can be sold in five phases as a way of overcoming stiff lending guidelines requiring that a large percentage of condominium units be pre-sold.
While Canadian developer Pointe of View has begun renting units in a portion of the East Village high-rise, no sales have closed, leaving the developer with little ongoing revenue to pay off the loan, which was taken out in early 2005.
Company CEO Randy Klapstein said Thursday he was unsure why the lender waited until last month to file a notice of default on a loan due last September, but he said the two parties have been talking for some time to work out an extension that would give Pointe of View time to sell the bulk of the 679 condos. The outstanding loan balance is $197.8 million, according to the notice of default.
“I think they feel (the notice of default) is part of what they should have done earlier, and they just didn’t, or maybe it’s what their lawyer recommended,” Klapstein said. “But we’re still on good terms with our lender, and working together to have an orderly sale of all the units and negotiating the final terms of the sellout period, which would be 24 to 30 months.”
…
I was thinking about the Fed’s low interest rate policy and it hit that it’s just another tax payer bailout. The Fed loan’s banks money at .25%, the banks buy risk free Treasuries and collects the difference in interest payments. Since the tax payer pays the interest on the treasuries, it’s a stealth tax payer bailout. Its a sneaky way of funneling tax payers money to the banks. Especially since the consumer has not seen the benefits of the low interest rates. If anything most peoples interest rates, on things like credit cards, have gone up.
That’s a clever description of the ongoing bank recapitalisation scheme. In addition, these are the same Treasury sales used to buy equities to recapitalise these banks.
Nevertheless, as the burden of public debt increases and absorbed on banks’ balance sheets, like Greece and other debt laden economies, our debts may become too difficult to collect.
More and more, it reads like they are just moving around the deck chairs as this behemoth sinks.
Blue Skye is officially in the land free phase. I’m out of my rental of six years and have passed on the barn and land deal. Something will come along I’m sure but for now I will live the frugal nomad lifestyle. The old Airstream is home until I go cruising again on the boat. It is a little strange feeling plunging into the “insecurity” zone but both feet are in. “By land and by sea” as the motto of the Macdonalds goes.
I think this will be a low cost way to sit out what I personally consider will be a protracted slide, stay flexible for the opportunities of a changed economy in the future, and enjoy the dreams of a lifetime while I am physically able. The financial shock (good) of going to renting will now be multiplied by two. Either on the boat or in the RV, my “rent and utilities” will be about $200 a month, depending on the scenery I choose.
Still employed in a business that has morphed. Plenty of opportunities to expand into new areas to keep the plate as full as I want or need. I guess now that my office is officially on the boat, some of those expenses will be tax deductible! Can you deduct sunscreen as a business expense? Cell phones and the mobile internet card are great things. Considering establishing residence in a state without income tax (vs NY), don’t know the workings of this yet.
For now, I am about as far up in the HBB bleachers as I can get. Those underwater houses down below look really small.
Congratulations, Blue Sky. Enjoy the ride.
An old Airstream. If there was ever a more fabulous RV/trailer, I don’t know about it.
our safest abode is our 22 ft Kit Companion travel trailer. I spend my weeks mostly out at the coast with my dog, sub teaching while my kids stay in central Oregon. Sure I miss the kids, but my wife works two PT jobs here, that I don’t want her to quit cuz she can work while the kids are at school.
I love my man-cave, I hate that I work seperate from kids. I did get one sub gig that allows me to work and drive 30 miles home. This may allow me to bring the man cave back over the pass and park it in the driveway for awhile, it is rusting out at the coast. But this week I am booked out there, so there I will go, surfboard and dog in hand. Skypeing the kids and wife.
Cool Mike…Where are you at on the Oregon Coast
I rove between Seaside and Lincoln City. Miss my friends who rove the 3 mile/4mile Davenport Waddell Ck north coast, not to mention my best bud who lives in Cambria and the trips we made to Willow, Sand Dollar and other big sur haunts. Friend now either surfs rincon on his way to work or makes time to jet ski to Governments. Or tows into the big stuff, not for me after I nearly drowned at Jalama Beach I am a big wave wuss. Seaside is gnarly nuff, with the peeps scarier than the sharks.
As this is not a surf blog, I hope “vague is vogue” is not in effect here!
Lincoln City to Seaside. Used to visit 3 & 4 mile, Davenport, Waddell Crk. Loved it till car break ins bummed me out, as you gotta cross those fields which leave you vulnerable to rip off artists. Better off in seaside, least the people are just hostile but you can see your rig and go left dependably.
Keep the wind to your back, Blue Skye. Nice to be above the floodwaters when the dam bursts.
Good Man. I’ll hang with you Blue. I’m finally seeing cracks in the dam out here in SoCal. Nothing Nada Zip is selling in the high end ranges, and the short sale / forclosure listings are starting to pile up on my ZIP search engine for all price ranges.
My wife and I will hold out at least 24 more mos.
Sounds awesome, Blue Skye!
Hope you enjoy your travels.
Just today, we were at the fishing docks, and we discussed (again) the idea of giving up on the ever-manipulated housing market and just buying a live-aboard. My DH already has his captain’s license, and we homeschool our kids, so we don’t have too much to tie us to land (his job, but he can get there from where we’d dock the boat).
I might be asking you some questions as we consider a similar move ourselves.
Enjoy your freedom, Blue!
Here’s a little piece of the puzzle.
http://www.nytimes.com/2003/08/01/business/some-exemptions-are-proposed-on-predatory-lending-laws.html?pagewanted=1
Isn’t it nice to see the mafia going legit?
Yes! This is one of the things we were talking about years ago…but nobody in the administration (or anywhere) is talking about now.
Good find!!!!
This is what needs to get out. IMHO, it proves that many people did indeed “see it coming,” and were trying to stop it, but were constantly thwarted by the PTB.
Thank you, REhobbyist!
Lots of foreclosures released in Sacramento this week. They seem higher in price than last year. I hope they close at lower prices, or the buyers will be sorry next year. I saw one house that has foreclosed twice, in 2007 and 2010.
Banks turning to incentives instead of bullying tactics resolve failing loans
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 7:32 p.m. Saturday, April 17, 2010
Debt collectors pursuing delinquent homeowners are turning to guidance counseling and gift cards to resolve failing loans.
Instead of traditional hardball tactics, SunTrust has courted struggling borrowers with kitschy care packages and $200, while West Palm Beach-based Ocwen Financial Corp. helps connect homeowners with food banks, employment services and even suicide hot lines through a nationwide social service referral company.
To be sure, there are still thousands of homeowner horror stories about dealing with relentless mortgage servicers and lenders trying to collect on defaulted loans.
With banks repossessing 22,050 Florida homes in the first quarter of this year alone, and filing another 88,072 initial foreclosure notices, there’s likely more bristling among borrowers than bliss.
But financial and real estate analysts say banks are realizing that torment isn’t always the right tactic, and that turned-off customers aren’t likely to come back when the housing crisis wanes.
“Banks spent billions of dollars in branding, establishing a name, and it all got blown to smithereens in minutes,” said Sylvia Ayalon, an analyst at the Consumer Mortgage Audit Center in Fort Lauderdale. “The traditional banking method was, ‘You owe me money, pay up or else.’ Now they have to rethink; they can’t be the big bully on the block.”
Ocwen, a national servicer with a reputation for taking on nonperforming loans, has traditionally tried an empathetic approach, company officials said.
Sometimes, though, just being nice isn’t enough.
Since January, Ocwen has referred 11,200 customers to social service groups.
“People don’t just need help with housing counseling anymore,” said MortgageKeeper President Rochelle Nawrocki Gorey. “They need help with their budget, unemployment, job training, résumé writing, groceries.”
Christopher James, a University of Florida economics and finance professor, said banks have always offered credit counseling to turn around delinquent loans.
This housing crash is more complicated, he said. Unemployment is coupled with bad loans and underwater mortgages.
It’s no longer just “deadbeats” losing their homes, Alayon added.
Chase’s formula for contacting borrowers includes 36 phone calls, 15 letters and two “door knocks.”
But to make things easier on clients, Chase is opening 51 loan servicing centers nationwide — two are in Palm Beach County — and pledging to meet with borrowers face-to-face and on their schedule.
Now if a guy commits suicide in a house, do they have to disclose it to the next buyer?
And what about if he offs himself in the backyard? Or lands in his neighbors driveway? Does his neighbor have to disclose?
Or lands in his neighbors driveway? Does his neighbor have to disclose?
Interesting that you ask that question…It recently occurred to a friend of mine in my zip…Next door neighbor offed himself in my friends backyard…He was a Realtor and the suspected reasoning was that if he did it in his own house his wife would need to disclose if she sold the house…
Seriously????
guy commits suicide in a house ??
I believe the answer is yes…I think for at least three years…A bank that has foreclosed may not need to disclose…
“People don’t just need help with housing counseling anymore,” said MortgageKeeper President Rochelle Nawrocki Gorey. “They need help with their budget, unemployment, job training, résumé writing, groceries.”
What job training?
For what jobs?
What budget?
Not unemployment, but EMployment.
…and if you don’t how to write a basic resume, you don’t deserve job.
http://www.telegraph.co.uk/travel/travelnews/7601701/Volcano-chaos-could-continue-for-months.html
Europe and the UK are experiencing huge economic losses for each day that volcanic ash continues to impair air transportation. Volcanoes tend to erupt for weeks and months, not days. People in our interlocked, just-in-time economic supply chains tend to forget that God and nature still have a say.
Is Europe in the shade of a giant black swan?
Between the Black Swan and the Giant Vampire Squid, global markets look hosed going forward.
Feels like we’re living in a Japanese monster movie.
We need Godzilla! Where are you Godzilla?
Mothra is on her way.
History shows again and again how nature points out the folly of men.
Oh no Godzilla!
People in our interlocked, just-in-time economic supply chains tend to forget that God and nature still have a say ??
Yep…The black-swan effect…
http://www.guardian.co.uk/world/2010/apr/15/iceland-volcano-weather-french-revolution
The 1783 eruption of an Icelandic volcano lasted for over eight months. Food shortages related to the volcano’s effect on agriculture may have been a factor in formenting the French Revolution. Given modern Europe’s highly-interlocked economies and reliance on air transport, European markets and leaders had better be praying that this eruption runs its course in a few more days.
Maybe the ECB could offer the volcano 0% so it can go make some money?
Central banks, is there nothing they can’t do?
You think this was anything to do with the EU trying to hose Iceland.
Maybe Pompeii next, a massive earthquake in Greece, a grape blight in France.
Most history information tends to leave out the environmental factors.
I view that as almost criminal.
Good point.
“Normally, a volcano spews out ash to begin with and then it changes into lava, but here it continues to spew out ash, because of the glacier,” said Reynir Bodvarsson, director of Swedish National Seismic Network. “It is very special.”
The volcanos are “different” there.
This morning I was looking at a *ahem* liberal blog, and there is a discussion about the run-around for getting into the HAMP program. Lots of stories of bankers and lawyers “losing” information, annoying FB’s to the point of making them go away, and then offering the bank’s exclusive offer, at a high price, of course. Definitely acting in bad faith.
Then the discussion moved into ways of “stabilizing” home prices. This is just making me angry. As much as I’d like some FB’s to be helped, you can’t save the baby without saving the bathwater, and at this point, the bathwater is drowning the baby, so to speak. Housing prices are just gonna have to crash. And at least one more of these frick banks needs to go down just to scare them again.
“Then the discussion moved into ways of “stabilizing” home prices.”
Heheh, their own property values outweigh their concern for social justice (affordable housing). Quel bourgeois…
Let them eat cake.
My rent in LA is going up $50 per month for my lease renewal. I noticed fewer empty spaces in the assigned parking garage, so I can see their justification. Well at least they will clean the carpets for the renewal at no extra charge.
Now I wonder if this is a sign of Los Angeles vacancy rates overall going down, or if it’s just localized. If so, this could be near a bottom in L.A.
I’ll be interested to see if my rent in Phoenix changes this Fall when I renew that lease. I stand by my prediction of lower rent there.
Do you fly from coast to coast and lay people off en masse? And buy your intimacy in Canada? Saw Up in the Air, and remembering your comments from yesterday re marriage, I am thinking you are that guy. No ties baby, no ties! I don’t envy you, but once a month I can relate.
“Lay people off en masse?”
I’m an engineer, not a manager and I don’t work in HR. I am not in the position to lay people off.
I rent everything except my paid-for seven year old car.
I buy everything, except for my wife! Intimacy is not a commodity IMO. Even in Canada
Damn I want to see that movie. I’m going to buy it as soon as I get home..
FWIW, a friend of mine is moving from her rented townhouse in north PHX because she came home one night last month to find a notice of trustee sale taped to the door. I went with her to look at several places over the last few weeks, and every one of them called her back after less than 48 hours with an offer of lower rent (she has a steady job, good income, etc.) She thought of buying, but I talked her out of it and told her to find a cheap rental and sit on her money for another year. She found a small but decent place in central PHX for $800 month. It’s a little patio home style complex that had been converted to sell as condos (as if), so it had double pane windows, new cabinets, appliances, flooring etc. There are lots of rentals here begging for tenants.
Good work! Your friend is going to thank you in year.
I talked an ex-girlfriend of mine out of buying real estate in 2006. I told her it was going to crash. She was into cash investments mostly at that time. Not sure if she changed her mind and went knifecatching before the 2008 market crash. She has $500,000 in savings.
I talked an ex-girlfriend of mine out of buying real estate in 2006
I did the same thing. Talked an ex out of buying a condo in LA that would likely be down 50% at this point.
A local used-house salesperon mentioned to me that the city recently passed a rent raise cap of 1% for 2010.
Comment by Bill in Los Angeles
2010-04-18 06:44:19
My rent in LA is going up $50 per month for my lease renewal. I noticed fewer empty spaces in the assigned parking garage, so I can see their justification. Well at least they will clean the carpets for the renewal at no extra charge.
Now I wonder if this is a sign of Los Angeles vacancy rates overall going down, or if it’s just localized. If so, this could be near a bottom in L.A.
———————-
Bill,
The rental market in our neck of the woods (coastal north San Diego County) is now much tighter than it was about a year ago. Back then, there was a sudden surge of empty rentals that lingered for much longer than usual. Now, they’ve all been rented out, and people we know who’ve been looking for a rental have said that it’s very difficult to find a rental (SFH in a decent neighborhood). Not sure how apartments are doing, but it looks like they’ve filled up quite a bit, too.
http://www.huffingtonpost.com/2010/04/17/jim-cramer-insulted-by-sy_n_541659.html
This is HILARIOUS. Wall Street shill Erin Burnett gets her panties in a twist when one of her guests tells it like it is about CNBC’s cozy relationship with Goldman Sachs. Of course she promptly pulled the plug on him - her panic over truth being disseminated on her show is palpable.
Sylvian Raynes of RSR Consulting is unlikely to be asked back on CNBC after yesterday’s performance during a segment hosted by Erin Burnett.
Burnett had Raynes on to discuss the fraud charges against Goldman Sachs. He thanked her for inviting him, and then promptly began insulting her show and personally going after CNBC’s Jim Cramer, a Goldman Sachs alum who was also on the panel.
Raynes accused Burnett of only having guests on who are “public relations officers for Goldman,” then asked her if “it’s okay if I’m a little critical.” Burnett objected to his charge, but Raynes had already moved on to insulting the intelligence of Cramer: “I want to remain shallow in deference to Mr. Cramer.”
Raynes made a couple points against Goldman before Burnett cut to commercial, telling the audience, “We’ll be back in just a second. Sylvian will not be with us. Sylvian, got to be more polite than that.”
Sylvian seems like the bad guy in a Bond movie. Gotta like him- even though all he really does is randomly insult everybody- it’s still fun to watch. (I particularly like when he points out to Cramer that he’s mispronouncing ‘abacus’.)
Anybody who insults Cramer and calls out CNBC on their own show is A-OK with me.
Damn straight! This guy is my new hero of the month!
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVo5ZVSswqlE&pos=3
Another “contained” crisis percolating back up. Dubai World was supposed to be “rescued,” remember? Apparently not.
Look on the bright side: At least the Greek crisis is over.
Um…no, it’s not. The “rescue” consists of pledges of aid IF GREECE ASKED. While the MSM would like you to believe the funds have already been allocated, the instant Greece asks for them there will be suits filed in German courts asking the courts to declare these pledges null and void, since they violate the EU’s explicit ban on bailouts to member nations. The German people, parliament, and Bundsbank are all dead set against what their globalist leaders have promised without their consent. This is by no means a done deal.
You have to read his link, Sammy. PB was being sarcastic (I think).
http://www.bloomberg.com/apps/news?pid=20601087&sid=a2ZdIpE3F1Fg
Britain has joined Germany in calling for a probe of Goldman Sachs. The morally bankrupt UK Prime Minister, Gordon Brown, declares himself “shocked!” and calls GS “morally bankrupt.” This is the same clown who sold off Britain’s gold reserves to his City of London bankster pals when it was at a record low of $255 an oz. Gold has since quadrupled in price.
Where’s the Dr? I thought he always showed up in time to save Britain from some evil threat!
“We have to pass the bill so that you can find out what is in it.”
Nancy Pelosi
Officer, I had to speed to see what the fine was.
Teacher, I don’t FEEL tardy….
“Honest! It isn’t our fault there isn’t a modem in the computer we just sold you.” (Best Buy, August 2006)
“You have to have the procedure before we can know how much it costs and if insurance will cover it.”
And sadly, this one is NOT snark.
The Cleveland Model: A Grassroots Approach to Job Creation
By Al Jazeera English
http://www.thenation.com/doc/20100426/aljazeera
On this episode, Fault Lines explores some of the creative ways that local governments and communities are addressing the unemployment crisis. With almost 30 million people across the nation unemployed and Washington preferring to letting the economy follow the whims of unfettered capitalism rather than directly creating jobs, new approaches that think outside of the “Beltway-box” are becoming more popular, including “The Cleveland Model,”
The world turned upside down
The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation, says Adrian Wooldridge
IN 1980 American car executives were so shaken to find that Japan had replaced the United States as the world’s leading carmaker that they began to visit Japan to find out what was going on. How could the Japanese beat the Americans on both price and reliability? And how did they manage to produce new models so quickly? The visitors discovered that the answer was not industrial policy or state subsidies, as they had expected, but business innovation. The Japanese had invented a new system of making things that was quickly dubbed “lean manufacturing”.
This special report will argue that something comparable is now happening in the emerging world. Developing countries are becoming hotbeds of business innovation in much the same way as Japan did from the 1950s onwards. They are coming up with new products and services that are dramatically cheaper than their Western equivalents: $3,000 cars, $300 computers and $30 mobile phones that provide nationwide service for just 2 cents a minute. They are reinventing systems of production and distribution, and they are experimenting with entirely new business models. All the elements of modern business, from supply-chain management to recruitment and retention, are being rejigged or reinvented in one emerging market or another.
http://www.economist.com/specialreports/displayStory.cfm?story_id=15879369&source=hptextfeature
They are coming up with new products and services that are dramatically cheaper than their Western equivalents: $3,000 cars, $300 computers and $30 mobile phones that provide nationwide service for just 2 cents a minute.
Sounds like they’re just designing products for third world budgets- something companies here have preferred not to do for their domestic customers. It’s not in their interest to have us driving inexpensive cars and using inexpensive computers, cell phones, etc. At least third world priced goods will be available to us as we morph into a third world nation.
You have to make and sell what people can afford to buy. Reality is about to strike America. American businesses have gone from cost + a markup pricing model to what people are willing to pay pricing model. Greedy American business (their motto is hanging the customer upside down and shaking them for every thing) would rather sell a widget for $5.00 rather than 5 widgets for $1.00 dollar. A need based service prices itself for above $125.00 + per hour. I know builders who were making 23 to 27 percent profits on a million dollar homes which they could build in less than a year. Imho this causes the cost of living in the US to be high as compared to other countries. Greed and sloth is what will destroy America.
Sloth will be our salvation! Sloth is the enemy of greed.
Everyone chill out and quit chasing that golden carrot. You’re getting played for suckers.
The big boyz fear sloth because sloth=leisure=time to think. They don’t want that to catch on. They want you busting your hump to buy a plasma teevee.
$3,000 cars
Keep in mind that those $3000 wouldn’t come close to meeting our safety or environmental standards. Of course once we’re a 3rd world country those standards will probably go out the window.
Hardly surprising.
In fact, this is very much welcomed by some. Including me.
If our regulatory system and laws are so entangled and punitive that our populace cannot innovate, then that’s our problem.
Score one for them.
I’d contemplate moving overseas to help them, but doing so is difficult due to U.S. laws.
I’d contemplate moving overseas to help them, but doing so is difficult due to U.S. laws.
Not to mentiion theirs. They want to create jobs for their citizens, not for Americans.
Agreed. We have become so tangled in environmentalism and red tape that rather than us innovating, we’d be better off investing in stocks of companies in BRIC and third world nations. VEIEX, PRASX.
If only we had the freedom to destroy our environment to make a quick buck. Those Chinese are so lucky.
+1
Do you know who the Japanese learned this from, SUGUy? An AMERICAN named William Deming.
An American who was rejected by the Big 3 when he approached them with his ideas. An American who was embraced by the Japanese in the 1950s.
And not just the car companies, but all Japanese heavy industry soon adopted his ideas.
An American who gave the country that rejected him after his enormous contributions, the big finger.
One of my heroes.
An American who grew up in the Cody/Powell, Wyoming area, where almost nobody knows who he was. I grew up there and never heard of him until college. There is also a WWII Japanese internment camp nearby, I’ve wondered whether a person could make a living there running a museum centered around Deming and the internment camp catering to Japanese tourists.
I’ll tell you who to get funding from… the Japanese.
Seriously.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aX1CAxJtU6X4&pos=2
Bill Clinton blames “bad advice” from his former Goldman Sachs advisers Rubin and Summers for his decision not to regulate derivatives. Hey Slick, are you familiar with the term “the buck stops here”? He could have sought out contrary opinions, but like his successors, he willingly let “Government Sachs” run the nation’s economic policies, i.e. looting Main Street for the enrichment of Wall Street.
“…he willingly let “Government Sachs” run the nation’s economic policies, i.e. looting Main Street for the enrichment of Wall Street.”
For how many White House terms by now has Gollum Sucks driven the nation’s economic policy? I guess if this goes back to 1992, we would be on our fifth time around with a Gollum Sucks puppet economic policy. There has never been a better time than the present to remove great vampire squids that suck the face of humanity.
When are people going to wake up and realize the current structure is designed for Wall Street to continuously loot Main Street? Why do you think people are now automatically enrolled in 401-k plans? Why do you think we had a dot com bubble or housing bubble? How else can you explain ZIRP in the midst of a national economic meltdown?
Wall Street isn’t batting for Main Street. It is batting against Main Street every day of the week and twice on mutual fund Mondays. Taking advice from Wall Street bankers for the benefit of Main Street is a really bad idea.
When are people going to wake up and realize the current structure is designed for Wall Street to continuously loot Main Street?
They’re too busy watching American Idol and waiting for the next easy money bubble.
When are people going to wake up?
Never. Until it’s too late. And even then many will still be in denial on their deathbed.
It’s one of the core lessons of history.
What are they going to do when they wake up?
Disposable Soldiers
The mortar shell that wrecked Chuck Luther’s life exploded at the base of the guard tower. Luther heard the brief whistling, followed by a flash of fire, a plume of smoke and a deafening bang that shook the tower and threw him to the floor. The Army sergeant’s head slammed against the concrete, and he lay there in the Iraqi heat, his nose leaking
“I remember laying there in a daze, looking around, trying to figure out where I was at,” he says. “I was nauseous. My teeth hurt. My shoulder hurt. And my right ear was killing me.” Luther picked himself up and finished his shift, then took some ibuprofen to dull the pain. The sergeant was seven months into his deployment at Camp Taji, in the volatile Sunni Triangle, twenty miles north of Baghdad. He was determined, he says, to complete his mission. But the short, muscular frame that had guided him to twenty-two honors–including three Army Achievement Medals and a Combat Action Badge–was basically broken. The shoulder pain persisted, and the hearing in his right ear, which evaporated on impact, never returned, replaced by the maddening hum of tinnitus.
Then came the headaches. “They’d start with a speckling in the corner of my vision, then grow worse and worse until finally the right eye would just shut down and go blank,” he says. “The left one felt like someone was stabbing me over and over in the eye.”
Doctors at Camp Taji’s aid station told Luther he was faking his symptoms. When he insisted he wasn’t, they presented a new diagnosis for his blindness: personality disorder.
http://www.thenation.com/doc/20100426/kors
Get used to it.
ObamaCare: 2023 A.D.
As opposed to present day private insurance care: claim denied.
Or those lovely placards I see at Dr’s offices these days: “Payment is expected at time of service”
I’m sure you don’t have any problem rendering services, and then waiting indefinitely to be paid.
Any kid who volunteers for the military is an idiot.
Any kid who volunteers for the military is an idiot ??
They prey mostly on young men with little future prospects…
Problem is when you’re a kid, you don’t understand any of that. All you know is that you need a steady paycheck and nobody else is hiring at a living wage. What makes it worse is that most of the people in the military will take the military’s side of the story against that guy until it happens to them.
You’ve obviously never served in the military.
For a lot of “kids” it’s a great way to launch out of the nest, have adventures, and get started on your life. You get to experience things and see places you’d never be able to otherwise. And most people in the military are well aware that “the military’s side of the story” is spin designed with cost-effectiveness and CYA in mind.
Bollocks!
Maybe you are smarter than the average but the average has simply no clue.
Of course, it’s great that they have no clue. Those that have a clue (like most on this board) get a free ride.
Sounds totally excellent to me!
For a lot of “kids” it’s a great way to launch out of the nest, have adventures
Yeah, I’m sure that a tour of duty in the middle east is a load of fun, especially when you get shot at.
Of course, it’s great that they have no clue. Those that have a clue (like most on this board) get a free ride.
Yeah, it does beat having a draft. And the way things are going there won’t be any shortage of over testosteroned, 100 IQ volunteer canon fodder for the long haul.
Here’s what a lot of people don’t get: for the typical self-absorbed American youth, gaining a “band of brothers” and thriving in a spartan, dangerous existence can be something of a revelation. As compared to the half-truths, half-friendships, half-sincerity that surround them in “normal” life.
I’m all for bringing back the draft. It would trim personnel costs and the middle class wouldn’t be quite so gung-ho [or indifferent] about going to war if their own sons might be in the front line.
You’ve obviously never served in the military.
You talking to me Sammy? I was in the 101st ABN from 87-90.
+1
Or pass a law requiring mandating mandatory military service for the kids/grandkids of any government official who makes decisions about military deployments. This includes Congress, and the Executive Branch.
(or Goldman Sucks, Exxon Mobil, etc.)
We are getting away from the “citizen soldier” model, and into the “full-time/career/professional military” model.
Sorta like the Germans, circa 1870-1945,…….and we all know how well that worked out for them.
it’s a great way to launch out of the nest, have adventures, and get started on your life ??
I totally agree Sammy…Its when they “Launch” you into interventionist wars that you IMO, become “prey” for the military…
My father was injured in WWII. Blindness and malaria. When I was a teenager in the 1970s he was relieved that I did not have to register. There was a two-year window where boys my age did not have to register for the draft. My dad was a staunch flag-waving Reagan supporter but would not want me in the military at all.
I went down to register, and was told, “Go home, there will be an announcement about Selective Service after Jan 1.” Which was the announcement that they were ending registration.
Frankly, I should have enlisted right after high school. I basically d#cked-off for the next 2-3 years anyway, before I decided what to do. Then, when I went to school, I found out that I would have been eligible for the Vietnam-era VA benefits (specifically, the education benefits) had I enlisted right out of high school, instead of funding my education out-of-pocket/working/school loans.
Let’s just say that the Vietnam-vets I went to school with had a lot easier time at school than I did.
As most military veterans say, “I wouldn’t take a million dollars for the experience, and I wouldn’t do it again for a million bucks”
Anyone I’ve ever met that has been in a war highly recommends against it.
It sounds like the pesky problem of Chinese savers pushing down U.S. interest rates may be about to seriously reverse itself (to the extent it has not already done so). A likely consequence is for the Chinese property bubble to shatter into smithereens. Try not to let yourself drown in the ensuing financial tsunami.
Bloomberg
China’s Rules to Curb Property ‘Madness’ Will Take Effect Now
April 16, 2010, 11:51 PM EDT
April 17 (Bloomberg) — China’s central bank pledged to immediately implement new lending rules to cool real-estate speculation and one of its policy advisers said the market is having its “last madness.”
The central bank commented in a statement on its Web site last night. Li Daokui, a newly appointed academic adviser to the monetary policy committee, spoke in an interview broadcast by state television on April 15.
Asset-price bubbles inflated by a credit boom could derail the recovery of the world’s fastest-growing major economy, which expanded 11.9 percent in the first quarter from a year earlier. China’s cabinet, the State Council, announced higher mortgage rates and down-payment ratios for second homes on April 15 after property prices jumped by a record in March.
Investors “don’t realize how strong and resolute the political will is among top leaders to curb price gains,” Li said on Central Television. The market is having its “last madness” and speculation may dissipate in a year or 18 months on extra action by local authorities and an increased supply of low-price, so-called policy homes, Li said.
Cheung Kong (Holdings) Ltd., the Hong Kong developer controlled by billionaire Li Ka-shing, said yesterday that efforts to cool the Chinese property market are “timely.”
“You want to take action before the market gets too hot,” Justin Chiu, executive director of Cheung Kong, said in a Bloomberg Television interview. “Prices have gone up really quite a lot; people buying for their own use should do it within their means. If they invest, they need to be cautious about interest rates.”
…
Your problem, as always, is that you make no distinction between the real economy and the financial economy.
House prices crashing to dirt-cheap levels would be GREAT for the US economy. For starters, it would make US manufacturing competitive with the rest of the world.
Unfortunately, given the financial economy, there’s no way to get to THERE from HERE.
Enjoy!
I’m afraid you’re right.
The only saving grace of the Saving & Loan disaster was that it did bring RE prices back down and created some spectacular deals that would turn extremely profitable just 6 years later.
This time? I’m not seeing it. 25% drop in prices is nothing after almost 100%+ run ups. Sure, in some places, but overall, not so much.
I mean we have bidding wars again fer crisake! Insane!
“…you make no distinction between the real economy and the financial economy.”
BTW, what is the distinction between the real economy and the financial economy? I have no clue…
Just for the record, so far as I am concerned, Wall Street can go up in flames, so long as the real economy is no longer driven earthward by the stupid financing they foist on Main Street Americans.
foist
Main Entry: foist
Pronunciation: \ˈfȯist\
Function: transitive verb
Etymology: probably from obsolete Dutch vuisten to take into one’s hand, from Middle Dutch vuysten, from vuyst fist; akin to Old English fȳst fist
Date: circa 1587
1 a : to introduce or insert surreptitiously or without warrant b : to force another to accept especially by stealth or deceit
2 : to pass off as genuine or worthy
Shiller: Hair-of-the-dog stimulus is a bad idea, but cold turkey is worse.
What do all these MSM-cited experts have against improved affordability? I thought affordable housing was the goal; now that Mr Market is on the brink of achieving it, Uncle Sam is acting with all its might to thwart market forces.
Home sales peaking out?
Mark Lacter • March 30 2010 10:15 AM
The government’s housing tax credit is due to expire at the end of next month, which means lots of folks are in the market for real estate (and which might explain why I’ve seen so many people at open houses). But what happens after April 30? Some economists are urging Congress to extend the credits (they’ve already been extended once) because homebuyers have come to expect them. From the NYT:
Robert Shiller, a professor of economics at Yale and co-developer of the Standard & Poor’s/Case-Shiller housing price index, is an early advocate. He thinks the credit was a bad idea that nevertheless the market cannot do without. “You don’t make drug addicts go cold turkey,” Mr. Shiller said. “The credit interferes with the market in an arbitrary way, but ending it now would be psychologically powerful. People will be in a bad mood about buying a house.” He advocates phasing it out gradually.
The federal credits are worth up to $8,000. Then there are California tax credits worth $10,000 (spread out over three years). So there’s quite an incentive to buy a house now - and quite a disincentive to buy later this year. That’s becoming a recurrent theme when it comes to all government stimulus programs: Can the economy keep growing without life support?
Stan Humphries, the executive in charge of data and analytics at the housing site Zillow dot com, said government support was crucial in breaking housing’s acute fall in 2007 and 2008, but that it had also obscured the actual weakness of the market. “Many people got the sense last year that we had bottomed out and were going to rebound in a V-shaped recovery,” he said.
Worse for whom? Certainly not J6P who has been unemployed for a year or more, already.
Merrill Accused Of Same Fraud As Goldman Sachs
Merrill Lynch now stands accused of the same fraudulent actions as Goldman Sachs. Please consider Merrill Used Same Alleged Fraud as Goldman, Bank Says
Merrill Lynch & Co. engaged in the same investor fraud that the U.S. Securities and Exchange Commission accused Goldman Sachs Group Inc. of committing, according to a bank that sued the firm in New York last year.
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA, known as Rabobank, claims Merrill, now a unit of Bank of America Corp., failed to tell it a key fact in advising on a synthetic collateralized debt obligation. Omitted was Merrill’s relationship with another client betting against the investment, which resulted in a loss of $45 million, Rabobank claims.
http://www.businessinsider.com/merrill-accused-of-same-fraud-as-goldman-sachs-2010-4#ixzz0lTKpLF8t
Shocked I tell you. Just shocked.
/sarcasm
These are the rogue actions of a couple of low-level bad apples, and are isolated cases. They are not indicative of a culture of corruption that goes to the core of our intertwined political and finance systems. Nothing to see here, folks. Just move along.
“Merrill Accused Of Same Fraud As Goldman Sachs”
Is anyone in the mood for a game of dominoes? If not, how about bowling? Or Kerplunk?
The Indian Stock Market: No Substitute for Resiliency
Few nations on earth have been so constantly plagued by strife as India has over the past few decades. The moment one crisis recedes another comes crashing down upon her shores. In a recent video report from the bustling heart of Mumbai, Bill Bonner described how the nation’s stock market dealt with two presidential assassinations, mass social unrest, the Asian currency crisis, the Kashmir War, cataclysmic weather patterns, the dotcom bust, Maoist insurgencies and terrorist attacks. The results are astounding.
“If the Great Recession can’t stop [India’s economy], what can?” relayed Bill. “The economy is so big and the middle class is growing so fast that many of these businesses you see on the street are making a lot of money…and they’re growing their sales by 30% per year. You can see that, if you can do that for a while, you can really make some money over the long run.”
Despite its unfortunate succession of calamities, the Bombay Stock Market has managed to return a staggering 17,400% since its inception, back in 1979. In the last decade alone, the Bombay Stock Exchange – BSE Sensex – climbed 248%. By contrast, the coddled members of Wall Street’s major indices managed only to lose money for American investors (DJIA -6.7%). Even the darlings of the American financial newspapers struggle to keep pace with India’s incessant growth.
Indeed, as Eric Fry mentioned earlier this week, “During the thirteen years since your editor dared to admire Indian stocks in public, the India Fund has delivered a dazzling return of nearly 800%, compared to a gain of only 44% for Intel. In other words, the India Fund has delivered a whopping 18% annualized return over the last thirteen-years-and counting, compared to Intel’s paltry 3% annualized return.”
The nearby graph, also provided by Mr. Fry, illustrates our story…
http://dailyreckoning.com/the-indian-stock-market-no-substitute-for-resiliency/
India. A country with more cell phones than toilets.
And we’re not talking about as many cell phones as you might think?
A retrospective given the current SEC charges against Goldman:
http://www.nytimes.com/2009/12/24/business/24trading.html?_r=1
D-rats = party of coercive contract modification
R-cans = party of individual responsibility
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* April 13, 2010, 1:19 PM ET
Pols Attack One Another Instead of Mortgage Lenders
By James R. Hagerty
Today’s hearing of the House Financial Services Committee was billed as an opportunity to grill big banks on their foreclosure-prevention efforts and especially their holdings of junior-lien mortgages, often seen as an obstacle to loan modifications.
But it swiftly disintegrated into a squabble between Republican and Democrat members over the whole idea of using government incentives and pressure to get easier loan terms for struggling borrowers.
Rep. Barney Frank, the committee chairman, a Democrat from Massachusetts, said the foreclosure crisis remains an “overhang” that blocks full recovery of the economy and thus must be addressed.
Rep. Spencer Bachus of Alabama, the ranking Republican, then raised the “fairness” issue sure to resound during this fall’s electoral campaigns across the country. Government bailouts mean “responsible homeowners” are having to pay for rescues of “their less prudent neighbors,” he said.
He also deplored government efforts to “coerce” banks into reducing mortgage principal for more borrowers. Delving into that kind of detail in directing the banks’ efforts is “a slippery slope,” Rep. Bachus said. He added: “The market needs to find its own footing,” without government intervention, he added.
Rep. Jeb Hensarling, a Texas Republican, decried what he called “another chapter of ‘America: The Bailout Nation,’” a book he said was being written by President Obama and Rep. Nancy Pelosi of California, the House majority leader.
“We must remember that 94% of Americans own their home outright, rent or are current on their mortgage,” Rep. Hensarling said, “and they are being asked to bailout the other 6%. It’s a policy that says to the citizens who work hard, who live within their means, who save for a rainy day; ‘you are a sucker.’ When you are struggling to pay your own mortgage, you shouldn’t be forced to pay your neighbors as well.”
…
My default vote from now on goes to the R-cans. At least some of them believe in rational economic policy, instead of endless moral hazard incentives.
Needless to say, I will NEVER, EVER vote for Stupid Sarah. (Similar philosophy applies to Hitlary…)
my default vote from now on goes to the R-cans. At least some of them believe in rational economic policy…
Gettin’ played for a fool again, blues…
Learned all about it,
On Fox ‘news’…
That good ole, easy answer,
Fooled again blues….
Right down to my…
Free market, made in China shoes…
“R-cans = party of individual responsibility”
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Yep, every defaulted loan above $450,000= D-rats
R-cans = “TruePurity™”
These people sure do have a sucky home life compared to ours. Renting has its benefits!
* BROWNSTONE DIARY
* APRIL 17, 2010, 2:17 P.M. ET
My Marriage: Also Under Renovation
By JULIA ANGWIN
The ground floor: We’re getting closer to the finish line.
Lately, it seems as though our marriage is undergoing the same process as our Harlem brownstone. It’s being gutted and remade anew.
Prior to the renovation, my husband and I strived for equality. Since each of our jobs are equally consuming, we shared household tasks such as cooking dinner, taking care of the kids and keeping the house relatively tidy. It wasn’t always perfect, but it worked OK.
Since we started work on the house, we’ve fallen into a different pattern. Vijay, who is an engineer, spends most of his non-work time supervising the renovation. He spends hours on tasks for which I have no patience: Photographing holes in the walls that he wants to make sure are filled when the contractors install insulation; or bringing in an architect friend for an informed second opinion about the rotted beams.
Though I’m still involved in the renovation, I spend most of my non-work time overseeing our children, ages 2 and 5. And I do it in a new smaller apartment we moved into during renovation to save money.
…
An independent voice among the flock of sheep known as the FOMC is a dangerous unknown.
This Fed Renegade Could Make or Break the Market
Thursday, April 15, 2010 - 4:49 PM
Nathan Slaughter, editor of Market Advisor and The ETF Authority has developed a long and successful track record over the years by finding profitable investments no matter where they hide.
Could Thomas Hoenig have a real impact on your portfolio?
You bet he could.
He only has one voice — but it’s a highly influential one. In fact, the last time he had spoke in public on April 7th, the Dow backpedaled 70 points in a matter of minutes.
Mr. Hoenig is the President of the Kansas City branch of the Federal Reserve board. That means he sits with Ben Bernanke and the board of governors to decide the future direction of the nation’s monetary policy.
As such, he not only wields tremendous power over the stock and bond markets, but also has a direct say in how much you might pay for your next car loan. And right now, he’s saying one thing unequivocally: interest rates need to be higher.
The Fed has kept short-term interest rates near zero since December 2008 and telegraphed that they will remain there for the foreseeable future. But those cuts were an emergency measure made during the heart of the financial crisis, and the U.S. economy is no longer on life support.
Hoenig (among others) argue that we need to stop dispensing the monetary medicine — before it causes damaging side effects. He has openly dissented with his colleagues at recent Federal Open Market Committee meetings. He has warned that keeping rates artificially low can, “distort the allocation of resources in the economy and contribute to the buildup of financial imbalances.”
His solution? Raise rates to at least 1.0% to forestall inflation and prevent possible asset bubbles. Hoenig may be hawkish, but he has a point. Loose credit can be a dangerous thing and 1.0% is still relatively cheap, just not free.
Hoenig has also called on Washington to do a better job of balancing the books. After seeing a record $1.6 trillion shortfall in President Obama’s 2010 budget, he warned that fiscal mismanagement could trigger another crisis.
So is any of this getting through to his colleagues? Well, that’s difficult to say. But you can bet they took notice of the latest employment report where payrolls expanded by 162,000 positions last month, the strongest figure in three years. With record high unemployment, the Fed’s hands have been tied. Job creation will give the central bank latitude to begin tightening rates.
…
I could deal with 1%. Fixed interest in I bonds would be about 1% or 1.5%, T-bills about the same. And 1% still far lower than 3.75% ten year notes. They will still yield 3.5%. But new issues will probably go closer to 5%. Not bad. Haven’t bought a 10 year note since last time the yield was 5%.
Criminal probe of Countrywide underway
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/04/18/financial/f174016D44.DTL&tsp=1
A newspaper is reporting that federal authorities are picking up the pace in a criminal investigation of former mortgage giant Countrywide Financial Corp. and its role in the meltdown in 2007 and 2008 of the U.S. housing and finance industries.
Inconceivable! This administration is owned by Wall Street. This is clearly another smoke and mirror tactic. Everything you see is false. Wall Street apologists, moral relativists, explain away this deplorable story before we all die of cognitive dissonance. Mitch McConnell, we need your wisdom. (*snicker*)
You keep using that word. I do not think it means what you think it means.
http://tinyurl.com/y74la9b
U.S. Housing Markets Facing Epic Hangover
April 18) — The housing crash that helped bring on the worst recession since the Great Depression will linger in the nation’s hardest-hit real estate markets until 2025 — or later.
Nearly a full generation will pass before major metro areas in Arizona, California, Florida and Nevada return to the solid ground reached at the height of the housing boom in 2006-2007. And it’ll take a decade or more for other urban markets in the Northeast and industrial Midwest to likewise return to peak conditions.
“…will linger in the nation’s hardest-hit real estate markets until 2025 — or later.”
There has never been a worse time to buy (except for maybe 2006…).