Bits Bucket For April 21, 2010
Post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
April 20, 2010
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Chinese Bank Watchdog Orders Quarterly Tests on Property Loans
April 21 (Bloomberg) — China’s banking regulator told larger banks to conduct quarterly stress tests on property loans and ensure the risks attached to such lending is strictly controlled after the government tightened credit rules to crack down on real-estate speculation.
Financial institutions must implement the central government’s property controls and use mortgage loan policies to “strictly” limit housing speculation, Liu Mingkang, head of the China Banking Regulatory Commission, said in a statement posted on the agency’s Web site yesterday.
China’s housing ministry toughened regulations on sales of uncompleted apartments by developers yesterday, adding to curbs on loans for third-home purchases, increased down-payment requirements and higher mortgage rates announced in the past week. China’s cabinet has said stricter measures to control speculation are needed after property prices in 70 cities jumped a record 11.7 percent in March.
Speaking of China, Bill Gates, what a POS. May I point out the insanity of having a charity that purports to “help” Africa, when by paying a halfway decent wage to his workers he could avoid scenes like this?
http://www.dailymail.co.uk/news/article-1266643/Microsofts-Chinese-workforce-tired-stay-awake.html
Bill Gates, what a POS. I guess, if you grind the life out of Chinese workers, you have a few more shekels to pour into the bottomless pit of Africa, which enables you to hobnob with Bono.
They are our slaves, let’s face it. I wonder how much longer it can go on - we sell the Chinese US securities we can never pay back, and use the money to buy $90 digital cameras made by our slaves at $2 day. If they rise up and refuse to be make our crap, would the USA help China put them down? I love all these cheap electronic gizmos, until I start thinking about how I get them.
OK - well, there’s one glaring question unanswered in this article. Are these people forced to work there? If not, then it’s not slavery. It’s a crappy job, but one they choose to do, because apparently the alternative (presumably abject poverty) is worse.
When the leaders of a nation ensure that all options for the common folk are horrible, the people are basically slaves, even if they have “choices” about how to spend their horrible lives.
That company is a sub. There is a possibility that the company does not know the conditions of the workforce.
If the people get too expensive then they get replaced with robots. And more jobs are lost!
When the leaders of a nation ensure that all options for the common folk are horrible, the people are basically slaves, even if they have “choices” about how to spend their horrible lives.
Bingo! Only someone with pitifully little knowledge of the world thinks that the average Chinese (or any third world) worker actually ‘chooses’ to work at a particular job, when the other choice is starvation. They work where they find it. ‘Choices’ are a luxury of first worlders.
Yes - fair enough. I’m not intimately aware of the choices that these people do have. Nevertheless I do know enough about China to know that other alternative isn’t generally prison or death or beatings, as would be the case in true slavery - it’s usually sustenance farming or the like.
If the other choice is death or beating or prison - the article should state as such, since then that would be true slavery.
If on the other hand the choice is “deeper poverty” then I would stand by my statement - it’s a choice they make, and it’s not slavery. Slavery by definition is not by choice.
The other choice is to work at a factory job somewhere else- assuming they can after being listed as a troublemaker for quitting the last job.
Sustenance farming is an option most don’t have, that’s why they’re slaving (yes) away in miserable factory jobs. Wouldn’t anyone choose self-sufficient farming over that, if they truly had a choice? (Unless by ’sustenance’ you mean ‘barely not starving to death’, which is hardly a choice.)
Ah, the race to the bottom. Its just heartwarming … well if you’re a billionaire it must be.
Camels passing through the eyes of needles.
These middle men contractor/suppliers are not uncommon as a way to distance the companies from the actual work conditions…
There are cases in the apparel biz where companies stopped using some factories because of publicity about abuses.
They contracted with a supplier who then placed the work in the same factories, allegedly without the knowledge of the company.
I believe Bill Gates is no longer involved with the day-to-day running of Microsoft. He is working on the Foundation full time. It happened a few years ago.
Well, maybe his “Foundation” could work on the sweatshop/slave labor conditions at the factories that produce for Microsoft. I mean, since he’s so concerned about the planet and all.
The Foundation works on educational issues in the US and disease prevention/cure issues outside the US. I took a public health class and the profs agrees that you could not overstate the impact of the Gates Foundation on international health issues. That is the language they used.
So, since his foundation has already built up expertise in several areas and provides funding whose impact cannot be overstated, why should they change their purpose exactly?
You going to tell the execs at the various banks that they can only give donations to charites that attempt to clean up the mess of the credit bubble? No? Why is Gates any different?
My FIL has been involved with the Gates foundation.
you could not overstate the impact of the Gates Foundation on international health issues
I have no clue about their success or value.
I suspect however, that it (the foundation) is an attempt by Gates to atone for attempting to cripple the computer industry for more than a decade by buying, burying, assimilating or killing competing technologies and trying (read bribe, misrepresent, discredit and lie) to force the world to use his products in order to charge monopoly rates.
you could not overstate the impact of the Gates Foundation on international health issues
Good thing, because he needs it to compensate for his many flops in education reform.
It’s the same old routine from the last period of the robber barons- make a hoard of money by crushing the little guys, then ‘atone’ for it by throwing some money at social causes. (the Carnegie Institute, The Rockefeller Foundation, et frickin cetera)
Gates is what is referred to as a “liberal elistist”.
Make outrageous sums of money while destroying any point of entry - then proport oneself to be for the same “common man” whom you’ve conveniently stripped of opportunity. The “let them eat cake” routine.
How ultimately Coastal. Does Bill have a place on Martha’s Vineyard?
NLC = Charles Kernaghan. I kind of hold Kernaghan on a high pedestal like I do William Black. Both are modern day heros to me.
You can see him in the documentary “The Corporation.”
Correct me if I’m wrong, but those “slaves” can walk out the door at any time, yes?
And go where? The next sweatshop?
Correct me if I’m wrong, but those “slaves” can walk out the door at any time, yes?
Dang your point really scored. I guess they can walk out the door any time…
But good thing their kids can’t huh?
Tethered but safe: Chinese workers tie their youngsters up at work because they can’t afford child care ~ Mail Foreign Service
21st April 2010
Sure they can walk out, the Chinese government has assured us so. They would never lie.
Wooden nickels will no longer be accepted for downpayment on third-homes (or fourth, fifth, and sixth) but still may be used on any homes purchased thereafter. Photocopy of “pot-to-piss-in” is now required of all fruit-pickers. Proof-of-pulse is being considered as a new stringent requirement by the banking committee.
Photocopy of “pot-to-piss-in” is now required of all fruit-pickers.
Are those the blunt instruments to prick the bubble? Funny thing is that a large part of the driving force behind the Chinese bubble are the local governments that depend on ever increasing prices as source of revenue and to make the GDP numbers work….a treadmill to hell.
I’m not usually one for stereotypes but the Chinese are famous for being big time gamblers… even without any Kool-Aid.
There is no way to stop this thing from playing itself out to a spectacular ending.
Been looking at Carlisle Barracks Pennsylvania. The market doesnt look like it was hurt too bad there. 18 Miles west of Harrisburg. We spoke with one realtor over the phone. She said to not expect huge movements in negotiations over rents, especially at the higher ranges.
My rent range can be between $1500 and $1700 a month. It seems you can get a nice house in that range. Of course I want the usual, good schools, safe neighborhood, etc.. With my new baby coming about Aug, I am going to need at least a four bedroom. I’m not going in hardcore mode for renting like I would for buying.
You could probably get a good job in one of the coal mines.
Stpn, welcome back to “the world.”
Carlisle is a pretty nice area. All of the more desirable Harrisburg suburbs are on the so-called west shore of the Susquehanna River.
Make sure you are well above the 1000 year flood zone….I lived in Beaufort SC for a while and one weekend it poured, and water rose to the front yard ,car tires was in 1 foot of water I was very lucky another foot and flooded car the people down the street close to the boat ramp were not as lucky ……..welcome back
Indeed!
This is why one can sometimes find waterfront property on the Chesapeake Bay for an affordable price… there’s a reason for that… when it rains hard or a storm blows through, you get an inground and indoor swimming pool for free.
$1500 and $1700 a month to rent 18 Miles west of Harrisburg???
That is going to be a very nice place.
That seems like really high rent! (Esp. if it doesn’t include utilities.)
Red-Blue makes no difference these turds all swim together in the cesspool. This POS will hopefully be flushed this Nov. but his pockets are loaded, so he can go back to porch light and do some more land swindles with his son.
Reid dodges questions on Goldman $$$
Congress, Democrats, Economy ~NBC
After criticizing Republican leaders yesterday for having a secret, closed-door meeting with Wall Street executives, Senate Majority Leader Harry Reid today faced his own questions about a fundraiser he attended this year hosted by the president of Goldman Sachs.
Asked by reporters to confirm his attendance and how it played into the debate over financial regulatory reform, Reid didn’t answer the question directly. Instead, he read from what appeared to be prepared remarks, touting his reform efforts.
“I’m leading the effort to rein in Wall Street,” he said at his weekly on-camera news conference. “I’m going to make sure that in this legislation I do everything within my ability to make sure that banks aren’t too big to fail.”
Asked later by NBC News to confirm the fundraiser, Reid spokesman Jim Manley readily did so — adding that everything was done in accordance with campaign finance rules. It raised $37,000, Manley said.
When news of Reid’s Goldman Sachs fundraiser was circulated yesterday, NRSC spokesman Brain Walsh said, “One can only presume that Sen. Reid will be return these donations immediately.” Today, Manley said the majority leader plans to keep the money.
Here is another one I’m hearing lately:
If the SEC is going to conduct a “witch hunt”, then the TBTF Banks will not lend. They will instead take the ZIR carry trade money they make “home as bonuses” and the efforts of the Fed will be for naught. (This was a Tech Ticker segment. I’m not sure what I think about Tech Ticker, but a follow them anyway.)
You just can’t make this stuff up! The CDO market is toast. The only people doing those “toilet bowl floaters” CDOs are Fannie and Freddie. The Feds efforts are already for naught. We need to ensure that the Wall Street Criminals understand that this type of fraud is not what we, the regular citizen’s of the world, want or need. The SEC prosecution is correct in that no one who has any sense trusts Wall Street, the Fed, or the US Gov’t these days. I mean you can’t even trust them to be the usual crooks and thieves that they are.
Jeez.
Roidy
The Feds efforts are already for naught. We need to ensure that the Wall Street Criminals understand that this type of fraud is not what we, the regular citizen’s of the world, want or need.
But maybe, just maybe the Fed’s efforts turning out being for naught will turn out to be the rope that hanged Wall Street.
What Wall Street and the banks did with the bailouts might have added just enough insult to injury to change the game.
“If the SEC is going to conduct a “witch hunt”, then the TBTF Banks will not lend.”
If they think they can just take their ball and go home, they are sadly mistaken. They can have their shoddy accounting standards revoked, and F & F can return all their toxic waste. For the few qualified borrowers out there, they will find a lender.
I guess if the Teapartiers can keep their social security and medicare, Reid can keep his Wall Street donations. The Republican party is responsible, through their continual opposition to campaign finance reform, for politics being the money race that it is today. Kind of funny when they act like it’s a bad thing- it’s their creation. (And also one of the root causes of our current crisis.)
People have paid into SS and want to get what they paid in. There is nothing hypocritical about that and at the same time wanting to reduce the size and scope of government.
You would have a valid point if SS were voluntary. If someone signed up for SS voluntarily 30 years ago and is now complaining about government, indeed that would be hypocritical. But as you well know there is no choice. Whether you want to or not, the government confiscates 12.4% of gross income in the the guise of Social Security.
And PS: is Obama giving back the $990K he received from Goldman Sachs?
There is nothing hypocritical about that and at the same time wanting to reduce the size and scope of government.
Of course there is — it’s fu@#$ing Socialism, right? Are Tea Baggers now of the opinion that Socialism is OK if they benefit directly from it?
Have you considered that maybe some of these people don’t actually like SS as a system, but they don’t want get get screwed out of $$ that they put into it already?
You can put me firmly in that camp. I want my SS benefits. But I also would very much like to see the system wound down, e.g. by stopping payments to it, and adjusting everyone’s future benefits accordingly. But not taking away existing obligated benefits.
If the illegals are entitled to SS, then so are we Baby Boomers. Nuff said.
Have you considered that maybe some of these people don’t actually like SS as a system, but they don’t want get get screwed out of $$ that they put into it already?
Of course.
But for people who treat socialism as a four-letter-word, who rail against socialistic policies as if they signify the End Times, that (reasonable) stance of yours is clearly hypocritical. They live in a simplistic black-and-white world.
Besides, I like yanking the Tea Baggers’ chains. What a humorless bunch of patoots …
Set up the system so you don’t have to take care of your own parents. Drain the system completely for yourselves. Leave the world to pay back your debts when you die.
Those of us in the following generations, thank you from the bottom of our hearts. Enjoy the karma.
Why should they get what they paid in to SS? I won’t get squat, but I’ll be paying for theirs. Fair is fair. I say start taking away benefits NOW, and means testing for those receiving SS from here on out. Time to start sending those checks back, hypocrites…
I’d bet you could means test SS and it wouldn’t reduce the payment total outgo very much. (Unless you want the old folks to starve to death).
Most people don’t have much saved.
ET,
Let me try again for you.
I give you $1000 with the promise of getting it back some day in the future when I’m old.
You take an extra $10,000 from me and spend it frivolously.
I want you to stop taking $10,000 from me but still want my $1000 back.
Still to difficult a concept to understand?
TOTALLY AGAINST MEANS TESTING.
THAT WOULD END UP PUNISHING THOSE WHO WORKED AND PREPARED.
I think you have to just trim the benefit levels and have some reductions.
Like the trade issues with NAFTA/China… hard to unscramble the egg.
When I see monies being handed out like after dinner mints to third world refugees who have paid nary a nickel into the system it burns my hide. Now when it’s time for full paying participants to collect we become hypocrites?
Please excuse me if I may be so bold as to ask for a benefit that I’ve paid for my entire life.
I guess if the Teapartiers can keep their social security and medicare,
I would have respect for the Tea Partiers if they were to start protesting the Endless Wars.
I would be a Tea Partier if one of their demands was that all Federal Government business be conducted in English.
I would have respect for the Tea Partiers if they were to start protesting the Endless Wars.
Why don’t they?
Cuz wars of aggression are patriotic?
Because they’re not actually for responsible, accountable, small government, they’re just a bunch of dillweeds that want to stop paying taxes.
Once you organize a grassroots group beyond the size that can fit around a dinner table, you pretty much start racking up morons until the average member of the group can barely tie his shoes.
Once you organize a grassroots group beyond the size that can fit around a dinner table, you pretty much start racking up morons until the average member of the group can barely tie his shoes.
Ummm, sf, have you been part of the same grassroots groups I have? Sounds like it.
As much as I like the grassroots concept, I tread carefully among the grassroots groups. Reasons given above in sfbubblebuyer’s post.
Is the HBB considered a grassroots group?
PS. While I can tie my shoes, I do have a habbit of leaving them loose so I can just slip them on and off.
Slim,
Possibly. Were you in the “Free Corsets for Toddlers” movement?
Seriously, though, grassroot movements vary rarely manage to stick to the issue they’re started on, and tend to attract the lunatic fringe. Short term grassroot pushes for specific candidates or ballot initiatives sometimes do fairly well, but general reform or topic groups dissolve into muddled flailing in short order.
One of the Washington Post guys reported that there was a Tea Party protest in Florida to increase spending on NASA.
Outer space is cool.
I just can’t understand the hang up/concern that the MSM and most liberals have with the tea-party groups. They are not going to have any real impact on the up coming elections.
The voting herd will do what they always do, pull the lever for repub or dem, whoever promises them the most, plain and simple, it’s been that way for ever. Any 3rd party will get it’s token 2% of the vote. Up start groups come and go, no need for anyone to get their panties in a wad. The ‘coffee’ bs group went poof fast.
I just can’t understand the hang up/concern that the MSM and most liberals have with the tea-party groups. They are not going to have any real impact on the up coming elections.
I’m not sure that it’s concern, more like contempt / confusion … no?
It’s concern. Otherwise the MSM would ignore the tea party movement.
And by showing contempt, the MSM and other libs give credibility to the movement, and further energize its followers.
Anyone who dares speak out against Obama will be met with contempt from the MSM.
I just can’t understand the hang up/concern that the MSM and most liberals have with the tea-party groups.
I find the Tea Party groups fascinating because they represent the (entirely predictable) splintering of the GOP.
After trading on the religious right to gain power, six years of Republican rule coupled with two disastrous Bush administrations have left a lot of true conservatives bitterly disappointed.
It’s almost laughable how the GOP is trying to co-opt the various Tea Factions while trying to blame the Democrats for the horrible state the GOP has put the country in, all in a desperate attempt to “rally the base” again in November.
The only cohesion the Republics™ have shown lately is a near-unanimous, childish insistence on referring to the Democratic Party as the “Democrat” Party.
Not that the democrats have anything to brag about after four years of congress and a 1-1/2 year administration.
“Not that the democrats have anything to brag about after four years of congress and a 1-1/2 year administration.”
Cheney-Shrub Shadow Legacy Effect #8: “We delivered the worst US Economy in 80 years, see ya”
+
“TrueDoNothing™ / “TrueObstructionists™ / TrueGridLokers™”
=
“Stuck in the political mud”
But Wall Street benefit from Shrub, and since Wall Street is the eCONomy (or so the talking heads on TV say), I guess all is well!
The GOP is finished, which (indirectly) will lead to the crumbling of the Dems as they go crazy-socialist, which will result in the less radical people splitting from the far left. Unfortunately, regardless of party, the crooks are still bought and paid for…
“It’s almost laughable how the GOP is trying to co-opt the various Tea Factions”
It’s like herding cats and the GOP is majorly pissed about it. Mitt “I wanna be President” Romney is probably fit to be tied.
The Republican party is coming apart. They’re first. Then the Dems will go, because their success depends on the Republicans. I love it. As wmbz said this AM, all these turds swim in the same cesspool.
Then the Dems will go, because their success depends on the Republicans.
We can only hope.
Things will only get worse in November. We seem to all agree - whether or not Tweedle Dee Party is in power or the Tweedle Dum Party is in power. What’s that say about the future?
Voluntaryists are going to gain in numbers. People who don’t even know what “voluntaryism” means will still join. It means opting out of government to the greatest extent without getting jailed (by not paying taxes):
Not voting
Not participating in juries
taking as much legal tax reduction schemes as possible
ignoring politicians.
Focusing on direct approaches to increasing your own freedom.
For those who can afford: thinking globally (it is legal to have two citizenships and some or all of your wealth offshore).
Harry Browne’s “How I Found Freedom in an Unfree World” principles will be adopted more and more.
The nonviolent revolution of civil disobedience is going to be more likely as the two largest parties and their loyal voters feeding at the trough take the U.S. down the toilet.
Everytime I hear Mitt Romney’s name as a candidate I start wanting to hurl.
About the same with Palin. She’s attractive and all but for god’s sake shut up. Too fricking stupid.
And I had hopes for Obama; to at least care about the middle class and jobs. Not a lot but some hope.
What a disapointment.
Hey Bill,
OK lets write the deflationista manifesto…
You can add into all those things… paticipate in the underground economy to avoid oppressive levels of sales tax. 9% is crazy.
We can also minimize consumption in lots of ways too.
1) Eat in vs stay out.
2) Make healthier choices and avoid dangerous sporting activities.
3) Leaner vacations to national parks/camping
keep your old car running and buy a used car.
4) Shop the thrift store
5) I know you don’t like this one but…
Give more money to the church to use for community projects. I think I do more good that way and got no where with out the structure. Also deprives the govt of funds. A lot of non-church activities where you can throw a lot of money. Not only the joy of helping but you also keep the fu&Kers from getting it. Double your pleasure!
6) Stay away from activities like theme parks. use free local parks.
Encourage all your friends to cut back too
7) Vote against any spending measure
9) Get a safe/deposit box and physically store your money. Safe is often better since the govt seems to be seizing stuff.
10) Drive instead of fly when you can. Hits another revenue source.
11) Be power use aware at home. Less AC, wear a sweater in winter. People used to wear sleeping caps cause we let houses be colder.
12) Learn to fix/maintain your own car.
13) Vanpool, carpool, bike or walk
14) Cancel cable. Huge number of free digital stations out there. Plenty of stuff available on the internet.
15) be careful driving. Go slow and obey the speed limit and traffic laws. Less fines.
16) Move to smaller homes/apartments. Cram the kids into one room. Really they probably do that on their own anyway.
17) No credit card purchases. Cash only. Try to go to shops that are cash only and force Visa to have the old credit/cash structure so we don’t pay for their service.
18) Avoid ATM fees like the plague. Carry a bit more money.
19) Put your kids in private school. Less funding justification for the union parasites.
Any and all consumption cuts will frustrate this plan. Wish I understood what the people in Japan have been thinking all these years.
We do all that for a while and I bet we could squeeze the GDP by a couple percent. Maybe another 5%.
I figure three years of this would be enough to break the banks.
Boy I’ll tell you we dodged a bullet with Bush huh. I tell you, I thought that 4-5% hellish unemployment would never end. Good thing we voted in a new guy who has kept unemployment nice and steady at 10% for the the past 18 months. And not only that but spent more in his first year in office than the last guy spent in his entire second term.
Not to mention that the new guy was supposed to end those big bad evil wars, but has done nothing about one and sent 30K more troops to the other.
I feel so much better.
I have just started reading Harry Browne’s previously mentioned book based.
And not only that but spent more in his first year in office than the last guy spent in his entire second term.
Cleaning up after Bush was never going to be cheap.
We’re going to be paying for it for years.
Hey Ki, did you notice a ‘housing bubble’ arising during Bush’s administration? Maybe that’s what were paying for now? Just a thought.
I wish you all were not trying to play this game.
We’ve gone over the bubbles again and again. Both parties had truebelievers in the bubblenomics. Heck, go back to Nixon getting away from the gold standard.
The Fed role. The SEC not being funded enough. Rubin and Paulson reducing reserve requirements. Rubin/greenspan allowing sweeps. Large swaths of congress/senate taking money from bankers. Large swath of congress voting for the TARP. Allowing the AIG bailout. Bailing out FAN/FRE. Fighting against reform for FRE/FAN. Dragging in FHA. Incresing the loan limits for Fre/Fan/Fha. Tax credits. LTCM bailout. Allowing TBTF. Deregulation.
You can look and see PLENTY to go around here.
One thing I’m getting pretty certain on: regulation. Have to look at any situation where short term profit can be made where consequences will be long term to everyone else.
Another thing that is bugging me. All the pension funding crisis. How much of that was caused by deceptive practices at TBTF? I think all that criminal behavior needs to be examined. Criminal misrepresentation.
You got banks that sold bad assets that were known bad assets that the banks were betting against. This causes pension funding crisis to occur so banks are able to raise borrowing costs to governments from a crisis they engineered.
People ought to be questioning a lot of things about the banks roll in this.
We really need an emergency bank run by the treasury to go around the Fed for things like this. Cause as soon as that hits the fan, the banks will have a hard time functioning.
James- I very much agree both parties share blame for this mess. (Although not equal blame.) My beef is with the party that wants to continue as it was- the Republics.
You say you favor a return to financial regulation? Gabba gabba, we accept you, one of us, one of us…
James, you have some good ideas.
Even as an atheist, I would not mind donating to a church for community projects as long as the money is really given to the community and that the pastor/reverund does not have a higher standard of living than me. And I live below my means.
My family knew some very nice church officials back in the 60s. The reverund probably did not take seriously what he was saying, although I did. It was a small community.
How anarchistic of you!
I came across some objectivist fellowship group a few years ago. Objectivism is Ayn Rand’s atheistic/conservative (except for pro-choice) philosophy that is anti anarchy/libertarian even though Atlas Shrugged’sGalt’s Gulch was an anarchistic society. The purpose of the objectivist fellowship was to develop a community of like-minds who meet for a philosophy day once a week. Kind of like the philosophy of religion, although not supposed to be a religion. Events would include discussing objectivism and fun stuff such as games of baseball or basketball, potlucks, camping, and so on.
I get what you are saying. You have some great ideas.
I’m not so sure about driving versus flying. I love flying. It is almost like a hobby.
Glad someone else controls your principles there Sloth?
I guess the Democrats are victims?
Say, since your party has controlled the branches of govt, why haven’t they persued finance reform?
Say, since your party has controlled the branches of govt, why haven’t they persued finance reform?
Uh, they are ‘persuing’ it, against the heated (bull$h!t) objections of the usual suspects. The free (to be corrupt) marketers.
Dude, with the people involved on both sides, they are looking for any reason for this to fail.
I could see the bill would probably get something attached to it, like social security reform, so it becomes toxic waste.
Nice backtrack, jack.
Rental equivalence included in some areas but not in others.
http://www.nytimes.com/2010/04/21/business/economy/21leonhardt.html?hp
“In some once bubbly markets, prices have fallen so far that buying a home appears to be a bargain, based on a New York Times analysis of prices and rents in 54 metropolitan areas. In South Florida, Phoenix and Las Vegas, house prices — relative to rents — are as low as in places that never experienced a bubble, like Indianapolis and St. Louis.”
“But in a handful of other areas, including San Francisco, Seattle and Portland, Ore., house prices remain significantly higher than they were before the bubble began. People who buy a home in these areas will face higher monthly costs than if they rented, even after taking tax deductions into account. As a result, buyers are effectively betting that prices will rise enough in future years to cover the difference.”
They base it on a buy to rent ratio of 20.
Of course if interest rates rise, the ratio will shift again.
They base it on a buy to rent ratio of 20.
Way too high. That’s a monthly price/rent of 240. Buying only makes sense at a monthly price/rent of 150, or 12.5 annual.
Read the comments on the article though, some are real classics.
http://community.nytimes.com/comments/www.nytimes.com/2010/04/21/business/economy/21leonhardt.html
Proving once again that NYT readers are no smarter than those in Peoria, IL.
+1 yogurt. A home equiv to mine is at about 200 ratio. I wouldn’t dare buy above 120. DC burbs.
I’m detecting a new permanent reality here and it’s not pleasant. Median house price appears to be permanently stuck at ~4-5x median income, and if they go lower, government and bottom feeders will do everything to prevent it. You can’t buy anything without someone trying to sell you something else. You can’t go anywhere physically or online without being tracked in one way or another. Lousy customer service is the only customer service you get. Living on a single income is a fantasy. College prices are never going back to where someone can work their way through school, and it hardly matters because you can’t get a job anyway. Unemployment Long commutes are the norm. There is no such thing as a small SFH — you choose between McMansion and Attached Product. The only good TV is PBS and that’s the two weeks out of the year that they aren’t begging for money. There isn’t a single surface that’s not plastered with advertising, and not a single spot that isn’t pierced with safety announcements or propaganda. The most fattening food is also the most government subsidized.
I fee like I’m living in a friendly version of 1984.
sorry for the rant; I’m in an airport and you know what airports are like.
sorry for the rant; I’m in an airport and you know what airports are like.
Bravo! That was a tour de force.
DC metro area prices as a multiple of income are driven to a large extent by the “benefit levels” enjoyed by Federal Employees, who are the heart of the market. Between health care coverage and the federal pension plan the value of a federal job per dollar of base pay is much higher than in the private sector. So, if you aren’t laying out $800/month for spousal and dependent health care and 15% of your base pay for 401-K contributions, that leaves a bunch more money to bid up prices on real estate with. Add the notion at Federal Employees have great job security compared to the private secto, and that the Federal goverment is hiring like crazy which drives up demand, and I can see that at the local level the prices of homes as a function of base pay could be much higher than in the real world.
To be on the old federal pension system, you have to have started working for the government nearly 25 years ago. That means a ton of federal workers have no illusions about being able to live on a pension (could you live on 30% of your current base salary?) and are saving for retirement like crazy. Anyone who isn’t is over 50 and not buying new houses in this area, though they might be thinking about a retirement house someplace else.
And of the people I know who do have the old style pension, almost all of them max out their 401(k)s anyway. With the house almost paid off, it is their only real “deduction” (actually an exclusion, but that is getting really technical).
Yep, I agree.
Note that with each problem you list, some corrupt clown up top benefits from the situation… sadly, I don’t see any of this changing for the better.
I was an early adopter of TiVo and satellite radio primarily to escape the endless advertising.
And that’s a huge problem for the advertising industry. They still haven’t figured out how to reach the people who’ve found various ways to escape.
Living on a single income is a fantasy.
We’re doing it, and our finances are looking better than ever. We moved into a trailer part half a mile from my job to make that happen, though. We’ll be here until houses here get cheap, or I can get a job somewhere I’d like to live where houses are cheap. In the meantime life is strange, but the bank balance keeps growing.
When I was a youngster in the Army I laughed at the weird older guys driving crappy cars with “Happiness is positive cash flow” bumper stickers”, but I get it now.
Oxide, we are in the same spot as Japan. After a short period of prices dropping steeply; prices declined slowly and painfully for 20 years. I think that is in nominal terms though. Have to check what I’ve been reading.
There isn’t much of a market for housing at those prices. Those of us locked out have no choice but to save and prepare for retirment and to wait.
Mentioned before. I’m prepared emotionaly at least, for housing to be a bad investment for the rest of my working career.
Watch the life get sucked out of this country.
“Watch the life get sucked out of this country.”
I’ve been watching this happen for 30 years.
I thought 150 ration was still too high…maybe 120 or lower….
Former co worker bought in 2005 in Vegas.
Purchase price of 340,000
Current valuation 130,000
I guess that pot of gold sprung a leak. It may now be cheaper to buy than to rent but your neighbors may not be Ozzie and Harriet, unless of course you mean Ozzie Osbourne and Harriet the Ax Murderer.
Bring it on … but no mention of where NYC falls on that scale? That might deter a few suckers, I suppose. Hell, I don’t need to read that. But fools are still snapping up nonbargains in my neighborhood in Queens.
What a garbage piece. Yes, NYC is mentioned and compared with L.A. Then they talk about the merits of renting a 7K a month 2-bed in Beverly Hills. Ridiculous BS. And then, by some stretch, it vaguely ropes in the “outer boroughs” with the midwest, etc., as possible places where it would make sense to buy. Total puff piece. Shameless shilling.
Heartfelt thanks to Mr. O’Driscoll for this provocative WSJ Op-ed piece. A critical mass of similar brutally honest critiques of the status quo might serve to stem free enterprise capitalism’s forced death march towards third world oligarchy. Hopefully it is not too late in the night to right the sinking ship.
* OPINION
* APRIL 20, 2010
An Economy of Liars
When government and business collude, it’s called crony capitalism. Expect more of this from the financial reforms contemplated in Washington.
By GERALD P. O’DRISCOLL JR.
Free markets depend on truth telling. Prices must reflect the valuations of consumers; interest rates must be reliable guides to entrepreneurs allocating capital across time; and a firm’s accounts must reflect the true value of the business. Rather than truth telling, we are becoming an economy of liars. The cause is straightforward: crony capitalism.
Thomas Carlyle, the 19th century Victorian essayist, unflatteringly described classical liberalism as “anarchy plus a constable.” As a romanticist, Carlyle hated the system—but described it accurately.
Classical liberals, whose modern counterparts are libertarians and small-government conservatives, believed that the state’s duties should be limited (1) to provide for the national defense; (2) to protect persons and property against force and fraud; and (3) to provide public goods that markets cannot. That conception of government and its duties was articulated by the Declaration of Independence and embodied in the U.S. Constitution.
Modern liberals have greatly expanded the list of government functions, but, aside from totalitarian regimes, I know of no modern political movement that has shortened it. While protecting citizens against force, both at home and abroad, is the government’s most basic function, protecting them against fraud is closely allied. By the use of force, a thief takes by arms what is not rightfully his; he who commits fraud takes secretly what is not rightfully his. It is the difference between a robber stealing brazenly on the street and a burglar stealing by stealth at night. The result is the same: the loss of property by its owner and the disordering of civil society. And government has failed miserably to perform this basic function.
Why has this happened? Financial services regulators failed to enforce laws and regulations against fraud. Bernie Madoff is the paradigmatic case and the Securities and Exchange Commission the paradigmatic failed regulator. Fraud is famously difficult to uncover, but as we now know, not Madoff’s. The SEC chose to ignore the evidence brought to its attention. Banking regulators allowed a kind of mortgage dubbed “liar loans” to flourish. And so on.
We have now learned of the creative way Lehman Brothers hid its leverage (how much money it was borrowing) by the use of a Repo 105. The Repo 105 meant Lehman temporarily swapped assets (such as bonds) for cash. A Repo, or repurchasing agreement, is a way to borrow money. But an accounting rule allowed Lehman to book the transaction as a sale and reduce its reported borrowings, according to a report by the court-appointed Lehman bankruptcy examiner, a former federal prosecutor, last month.
Are we to believe that regulators were unaware? Last week Goldman Sachs was accused in a civil fraud suit of deceiving many clients for the benefit of another, hedge-fund operator John Paulson.
The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century. Any static rule will be circumvented or manipulated to evade its application. Better than multiplying rules, financial accounting should be governed by the traditional principle that one has an affirmative duty to present the true condition fairly and accurately—not withstanding what any rule might otherwise allow. And financial institutions should have a duty of care to their customers. Lawyers tell me that would get us closer to the common law approach to fraud and bad dealing.
Public choice theory has identified the root causes of regulatory failure as the capture of regulators by the industry being regulated. Regulatory agencies begin to identify with the interests of the regulated rather than the public they are charged to protect. In a paper for the Federal Reserve’s Jackson Hole Conference in 2008, economist Willem Buiter described “cognitive capture,” by which regulators become incapable of thinking in terms other than that of the industry. On April 5 of this year, The Wall Street Journal chronicled the revolving door between industry and regulator in “Staffer One Day, Opponent the Next.”
Congressional committees overseeing industries succumb to the allure of campaign contributions, the solicitations of industry lobbyists, and the siren song of experts whose livelihood is beholden to the industry. The interests of industry and government become intertwined and it is regulation that binds those interests together. Business succeeds by getting along with politicians and regulators. And vice-versa through the revolving door.
We call that system not the free-market, but crony capitalism. It owes more to Benito Mussolini than to Adam Smith.
Nobel laureate Friedrich Hayek described the price system as an information-transmission mechanism. The interplay of producers and consumers establishes prices that reflect relative valuations of goods and services. Subsidies distort prices and lead to misallocation of resources (judged by the preferences of consumers and the opportunity costs of producers). Prices no longer convey true values but distorted ones.
Hayek’s mentor, Ludwig von Mises, predicted in the 1930s that communism would eventually fail because it did not rely on prices to allocate resources. He predicted that the wrong goods would be produced: too many of some, too few of others. He was proven correct.
In the U.S today, we are moving away from reliance on honest pricing. The federal government controls 90% of housing finance. Policies to encourage home ownership remain on the books, and more have been added. Fed policies of low interest rates result in capital being misallocated across time. Low interest rates particularly impact housing because a home is a pre-eminent long-lived asset whose value is enhanced by low interest rates.
Distorted prices and interest rates no longer serve as accurate indicators of the relative importance of goods. Crony capitalism ensures the special access of protected firms and industries to capital. Businesses that stumble in the process of doing what is politically favored are bailed out. That leads to moral hazard and more bailouts in the future. And those losing money may be enabled to hide it by accounting chicanery.
If we want to restore our economic freedom and recover the wonderfully productive free market, we must restore truth-telling on markets. That means the end to price-distorting subsidies, which include artificially low interest rates. No one admits to preferring crony capitalism, but an expansive regulatory state undergirds it in practice.
Piling on more rules and statutes will not produce something different than it has in the past. Reliance on affirmative principles of truth-telling in accounting statements and a duty of care would be preferable. Deregulation is not some kind of libertarian mantra but an absolute necessity if we are to exit crony capitalism.
Mr. O’Driscoll is a senior fellow at the Cato Institute. He has been a vice president at Citigroup and a vice president at the Federal Reserve Bank of Dallas.
We tried unregulated, so-called ‘free markets’ in the 19th century, and we had massive corruption and a continual boom/bust economy, culminating in the Long Depression which lasted for the last quarter of the century.
This guy thinks we can remove regulators and then we get ‘affirmative principles of truth-telling in accounting statements and a duty of care’? HA! Utter delusion. How would this work?
The idea that multiplying rules and statutes can protect consumers and investors is surely one of the great intellectual failures of the 20th century.
Sure is funny how it worked so well until we got a group in charge who thought like this guy does (the Reagan Revolution), who *de*regulated the financial companies, allowing them to once again loot and destroy the economy. Just like they always did back in the good old days.
The idea that we’ve never tried the deregulation pablum is a crock. It was tried and found wanting throughout the 19th century. It was tried again by Reagan et al, and we’re living with the consequences today.
It’s not an untried idea. It’s a tried-and-failed idea. It was FDR’s reforms and regulations that ushered in the period of maximum overall prosperity that America (or the world) had ever known. It was their removal or relaxation that brought on our current crisis. Or else it was one heck of a coincidence.
Yes.. we’ve tried everything..
Consider that stable, steady growth is impossible, and that boom-bust is the natural order of all things economic.
Consider that stable, steady growth is impossible, and that boom-bust is the natural order of all things economic.
Link? Funny how boom/busts happened to end with FDR’s regulatory changes, and recommenced when the Reaganites ended them.
A strange blip in the inevitability argument.
There are times when the consensus is that we can safely encourage more economic growth.
At other times growth needs to be throttled back.
Just as regulations were loosened in the Reagan era, today’s call for more regulations is a reaction to current events and conditions.
Sometime in the future we will no doubt blame a painfully slow economy on today’s increase in regulations, and will repeal some or all..
—–
The point is that instituting less or more regulatory control is a result, not a cause, of changing economic conditions.
Many conditions are completely beyond our control and the best we can do is try to adjust.
Since our adjustments are always a step behind, partly based on guesswork and can never be perfect, our quest to maintain a stable economy is doomed to failure.. and so we get booms and busts.
Since our adjustments are always a step behind, partly based on guesswork and can never be perfect, our quest to maintain a stable economy is doomed to failure.. and so we get booms and busts.
So we should do…opposite? When criminals loot the economic system…we should relax regulations? I’m all for a ‘revaluation of all values’, but that seems a bit much.
Criminals looted the economic system?
There was genuine criminal activity, which is to say there already exist laws against what someone has done?
Then why not enforce existing law and get on with life.. or is that too simple.
“That means the end to price-distorting subsidies, which include artificially low interest rates.”
just do this and you can add all the regualtions you want as far as i’m concerned.
culminating in the Long Depression which lasted for the last quarter of the century.
Again with the so-called “Long Depression”. It’s strength is very debatable, and it was certainly a weak recession at best. From Wikipedia:
So please stop throwing around falsehoods to attempt make your anti-free-market points.
So please stop throwing around falsehoods to attempt make your anti-free-market points.
Wow. Harsh words. Let us examine them for veracity.
So you’ve found someone who thinks that the Long Depression wasn’t so bad? Well, guess what, that’s true of pretty much every incident in history. There’s always a ‘counter’ school of thought on anything. That’s how professors make their livings and get tenure. You’d know this if you had any background in, or experience with, academics.
But are you seriously saying that the Long Depression never occurred? That would put you in a tiny minority of historians. Pretty much every encyclopedia and history textbook (even in Texas) says that it did occur. And who is it that has mounted this attack against the occurrence of the Long Depression? Why, it’s a guy from the Austrian School. And does the Austrian School maybe have a vested interest in the Long Depression not occurring? Why yes, they do. It would disprove most of their philosophy. So are they really a reliable source? Most everybody would say ‘no’.
You should be careful when you accuse others of using falsehoods to further their argument. Especially when you’re notorious for using links that don’t prove what you say they prove, Packman. But I’ll forgive you because you’re clearly in over your head, having learned one philosophy and thinking it splains everything. It would be charmingly naive, if you weren’t so big for your britches.
Might help make your case if you actually addressed the facts presented, alpha.
To the above I’ll add this, also from Wikipedia:
Causes of the crisis
The causes of the Depression are debated, mainly because it was not a production depression; it was a price depression.[6]
Personally I don’t consider “price depressions” to be bad things at all - they’re beneficial in fact, in allowing for a greater standard of living for savers. Production depressions are what are harmful.
Also I’ll add that the financial markets of the late 1800’s were far from “free”. The National Banking Acts set up federally-chartered banks that had special privileges, including allowing their bank notes to be backed by government bonds instead of by gold, and by actually being granted a monopoly on the issue of bank notes to these banks. Not sure I’d call a government-granted monopoly “free markets” at all, would you?
“The result is the same: the loss of property by its owner and the disordering of civil society.”
“That means the end to price-distorting subsidies, which include artificially low interest rates.”
Sir Greenisspent: “Rosebud…Financial Innovation…”
Public choice theory has identified the root causes of regulatory failure as the capture of regulators by the industry being regulated. Regulatory agencies begin to identify with the interests of the regulated rather than the public they are charged to protect. In a paper for the Federal Reserve’s Jackson Hole Conference in 2008, economist Willem Buiter described “cognitive capture,” by which regulators become incapable of thinking in terms other than that of the industry. On April 5 of this year, The Wall Street Journal chronicled the revolving door between industry and regulator in “Staffer One Day, Opponent the Next.”
Congressional committees overseeing industries succumb to the allure of campaign contributions, the solicitations of industry lobbyists, and the siren song of experts whose livelihood is beholden to the industry. The interests of industry and government become intertwined and it is regulation that binds those interests together. Business succeeds by getting along with politicians and regulators. And vice-versa through the revolving door.
So am I getting some support for campaign finance regulation from the Cato institute????? How about regulations that prevent regulators from working for financial firms for up to 5 years after they leave. Likewise financial employees can’t work as regulators for 5 years after leaving Wall Street.
Regulatory agencies begin to identify with the interests of the regulated rather than the public they are charged to protect…
How about regulations that prevent regulators from working for financial firms for up to 5 years after they leave. Likewise financial employees can’t work as regulators for 5 years after leaving Wall Street.
—-
If it’s true that regulators cannot help themselves from identifying with the interests of the regulated, why on earth would anyone see regulating the regulators as a solution?
If it’s true that regulators cannot help themselves from identifying with the interests of the regulated, why on earth would anyone see regulating the regulators as a solution?
Since people will always break the law, why should we have laws?
(And I believe he suggested ways to lessen ‘regulatory capture’, should you decide to read his post objectively, and not like a dittohead.)
alpha..
Since you mention it, there certainly are lots of laws we would be better off without.
Question authority.
Am I right in suspecting the laws you think we can do without involve dumping toxic waste wherever? (Free the corporations!)
“In the U.S today, we are moving away from reliance on honest pricing. The federal government controls 90% of housing finance. Policies to encourage home ownership remain on the books, and more have been added. Fed policies of low interest rates result in capital being misallocated across time. Low interest rates particularly impact housing because a home is a pre-eminent long-lived asset whose value is enhanced by low interest rates.”
Sounds like Mr O’Driscoll agrees with what many of us on this board have suggested for some time, which is that the Fed is deliberately targeting housing prices. This raises a few questions:
1) Is it within the scope of their charter to do this?
2) Doesn’t this action constitute a wealth allocation decision — e.g., they are forcing renters to pay higher rents and prospective home buyers to pay higher purchase prices than the market would dictate in order to prop up the value of assets on banks’ balance sheets, especially toxic MBS which Megabanks with bad gambling debt hold on their books, whose values were approaching zero before intervention happened?
3) Is price fixing legal if the Fed does it?
4) Assuming this policy is legal, why doesn’t the Fed explain to the Lilliputians in plain English what they are doing, instead of maintaining stealth regarding the intended effects of their financial engineering measures?
Open debate is the natural enemy of crony capitalist collusion.
Here is the natural enemy of real estate Mal-investment:
14%+
Now that the Fed (supposedly) has ended their MBS purchase program, what is holding down mortgage rates these days?
Corruption. Like everything else that is “fixed” for your protection so nothing gets in the way of your spending beyond your means.
Exactly!
Everything is set up to encourage people to CONSUME! and SPEND!!! and be dishonest. That is the new reality.
Nice article
It shouldn’t be an arguement of more vs less regulation
What we need is better regulation and better regulators that are separated from those they regulate. ie no revolving door and limited campaign contributions. Unfortunately the Supreme Court won’t allow this.
You expect the government to do a better job of regulating its own campaigns than it has done with the financial service industry?
You expect the government to do a better job of regulating its own campaigns than it has done with the financial service industry?
Circular reasoning at its best: ‘We (”conservatives”) won’t allow the government to properly oversee the financial system. Therefore, why should you think we would allow the government to properly oversee campaign financing?’
High & Low Finance
Low Rates Good for Banks, but Pity the Saver
By FLOYD NORRIS
Published: April 15, 2010
Aren’t low short-term interest rates wonderful?
If you are a bank, the answer is yes, particularly because the low rates are accompanied by somewhat higher longer-term rates.
If you are a saver, however, your view might be very different.
This month some interest rate spreads have reached record levels. The difference between what the Treasury pays on a one-year bill — less than half a percentage point — and what it pays on 10-year bonds — a little below 4 percent — expanded to the largest on record this month. In banking jargon, that is a very steep yield curve.
For banks, that is a license to make money with very little risk, particularly since they can get people to open savings accounts that pay close to nothing.
This week I checked the Web sites of the four largest banks in the country — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo — to see what they were offering on an ordinary savings account, say, one with $5,000 in it.
Chase, the retail operation of JPMorgan Chase, and Wells Fargo were offering 0.05 percent. That $5,000 would produce monthly interest of almost 21 cents. If you left such an account untouched for 20 years, and rates stayed where they are, the glories of compound interest would lead to a profit of $50. Before taxes, of course.
At that rate, if you wanted to put away enough to produce a retirement income of $50,000 a year, without touching the principal, you would need $100 million on deposit.
To be sure, you could get a better rate with that kind of money. But not that much better. JPMorgan Chase’s overall cost of funds in the first quarter of this year was only 0.83 percent.
Largely thanks to that, the bank reported an interest rate spread — the difference between what it charges for money and what it pays for it — of 3.24 percentage points in the first quarter. That is the highest for any quarter in at least five years. (Despite that spread, JPMorgan Chase reported losses on its consumer business, caused by bad loans made and credit cards issued while the credit party was going on.)
The other two banks were a little more generous to savers. Bank of America was offering 0.10 percent, and Citi was willing to pay a relatively high 0.25 percent.
If you open an account like those, be careful. If you make too many withdrawals or let the balance slip too low, some banks will charge fees. You don’t need a lot of fees to wipe out a rate of 0.05 percent. On the other hand, if you sign up for other services, the banks may offer slightly higher rates.
The lowest rate I found was from Chase. On an interest-bearing checking account, it offers 0.01 percent. With a $5,000 constant balance, by the end of the year you could accumulate 50 cents in interest.
Rates are low because the Federal Reserve wants them there, to help clean up the financial mess and stimulate the economy. All that makes sense, but it also feels unfair.
…
How could someone be so right about the problems and so wrong about the solution?
Beautiful day in Orlando yesterday. This place is unbelievably built up since last time I visited. I spent the day at a high end hotel/conference center attending a high tech manufacturer’s trade show (SVC). Most of the Euro guys couldn’t make it to staff their booths because of the flight cancellations. Hey Nycityboy, I hope you are headed home.
The floor of the show was a ghost town. A lot of the exhibitors are my customers and I usually don’t get more than a “Hi Skye, talk to you later.” They want to talk to prospects. This time I could stand and BS with all of them as long as I wanted to.
Most of them say business is “not quite as bad as last year”, but a lot of them also say they cannot hang on like this for much longer. Of course, some of them are not around already. Bottom line from the show; hardly anybody is shopping around for new equipment. There is some activity in power plants, that’s all I could find. The guys working Solar all have differeent jobs now. If one is established in Nuke plants there might be something soon.
This show has tentacles into almost all manufacturing. Plans are not even in the works. I’ve always taken this show as a 12 month forward predictor. The “econony” does not look to be in “recovery” yet.
Thanks for the report!
But… but… the stock market is UP! So the economy must be recovering! Green shoots!!
Neato. I’ve looked around for some PLC toys to play with, and we’re hoping to find a robot arm or 2 for our hacker clubhouse.
Chrysler reports $197M 1Q net loss, but says cash has grown to $7.4 billion
DETROIT (AP) — Chrysler Group LLC lost a staggering $3.8 billion from the time it left bankruptcy protection June 10 through the end of last year, but the automaker says its fortunes improved dramatically in the first quarter.
The struggling company, now run by Italy’s Fiat Group SpA, cut its net loss to $197 million from January through March and said it posted an operating profit from selling cars and trucks, before interest and taxes.
Moreover, Chrysler said it generated $1.5 billion in cash during the quarter, raising its reserves to $7.4 billion and reducing the likelihood that it will need more government aid. And the company predicted its operations would break even or be slightly profitable this year.
The Auburn Hills, Mich., automaker said Wednesday that it made an operating profit of $143 million in the first quarter, excluding taxes and interest.
“This positive operating result in the first quarter is a concrete indication to our customers, dealers and suppliers that the 2010 targets we have set for ourselves are achievable,” CEO Sergio Marchionne, who also heads Fiat, said in a statement. “We are also generating cash to finance the investments being made in our product portfolio and brand repositioning.”
Aside from rental car agencies and police departments, does anyone actually own a Chrysler anymore? I can’t think of anyone I know who owns one.
They must have some good rebates going, because surprisingly I’ve seen a lot of those rather ugly-looking station wagon thingies they make, brand-newwith the sticker in the window, driving down the roads around here.
does anyone actually own a Chrysler anymore?
I don’t know about where you are, but Vegas is lousy with Rams, Calibers, Durangos, Libertys, Patriots, 300s and Stratus’s
Rams, Calibers, Durangos, Libertys, Patriots, 300s and Stratus’s
—
Aside from the Rams I think those are mainly rentals. The Stratus especially. That is the Honda Accord of the car rental world.
Moi…….
Since 1977, I’ve owned (lessee, there was the 340 Duster, the 440 Dart, the Omni Coupe, the big block Satellite wagon, the mini-van, four Neons…….about 20-25, all told).
They’ve all been good cars. And they have some personality, differing from the toaster-like personalities of every Japanese car I’ve ever driven.
But I’m a gear head. Sometimes I just start up the 340 Dart, and just sit on the ground, between the tailpipes……..
Take an AWD Japanese car and put a race clutch, cams, exhaust, and a big turbo on it and the personality starts to come out. I agree that even the performance models are like toasters when they’re stock.
I had a Chrysler minivan once and it rocked. Oh yea, it was a Dodge.
I like the Charger, the Magnum and I think the 300 is pretty cool too. The PT was gutsy styling and sold OK.
I’ll check out clean used Chargers when I return to the USA.
I will not buy foreign again I don’t think. It just won’t feel right for me.
I had a Chrysler minivan once and it rocked.
Braggart.
‘If you see this minivan a-rockin’, don’t come a-knockin!’
Hey, leave my JEEP alone…you KIA / Hyundai ALL “look-A-likes” appear as silver/white go-carts.
I’m pretty happy with our ‘06 Town & Country. Of course I bought it used, with cash. I can’t imagine buying a new Chrysler, especially these days.
I purchased a Cummins diesel that came wrapped in a Dodge body.
It’s truely amazing that they’re still selling anything. Who buys stuff like that?
Ugly styling combined with questionable quality is not to you liking?
LOL!
Don’t they make a bently look-alike that is popular with the rap crowd? First time I saw one, I thought it was a Bently! Pearl white 300 I think it was.
Universal’s profit, attendance down
Orlando Business Journal
Attendance and profit at Universal Orlando Resort were down in the first quarter of 2010, theme park officials said late Tuesday.
Attendance at Universal Studios Florida and Islands of Adventure totaled 1.7 million in the first quarter, a 10 percent drop compared with the year-ago period, resort officials said.
Meanwhile, Universal reported earning $19 million in the first quarter before expenses, a 44 percent drop from $34 million earned in first-quarter 2009.
Officials said the attendance and revenue results were announced in advance of the company’s regular first-quarter Securities and Exchange Commission filing as it looks to take advantage of improving market conditions and seek a potential amendment to its $900 million term loan that is expected to result in lower interest rates.
Someday, if the planet doesn’t get incinerated by some nutjob with access to nuclear weapons, a future, and hopefully much saner civilization is going to come across the remains of these theme parks and wonder WTF that was all about.
I drove by there yesterday and looking over the treetops at the towering waterslides, I wondered myself.
Back in the mid-1980s, I took a trip to Disney and Epcot just to see what all fuss was about. Thinking myself a prudent Floridian, I went in October when the rates were down. Big mistake. I thought I would pass out from the heat and humidititty. That part of Florida is just a humid, fetid swamp with thrill rides. I guess you need a few thrills, to relieve the utter boredom of Epcot.
The best part of that trip was a side excursion to Juniper Springs. Now that was fun.
palmetto
Thank you for the one up that Orlando has a micro climate. I had difficulty breathing, so we had to leave early. I thought it was the whole state.
” I thought it was the whole state.”
Its the whole state.
Unfortunately, I go to Orlando waaaayy too much. People come down (from my and my GFs family) with the kids and go to Disney; we are too close to say “No” to coming up for a day or too.
I hate Orlando, and hate Disney (and the parks) even more. It’s a horrible place to live, I can’t imagine why anyone would want to be there. It’s not “Florida weather” in the winter (ie, it’s not all that warm, and can be downright nasty) and it’s so hot your car can melt through the pavement in the summer. It’s overcrowded, overpriced, and wayyyy over commercialized. I can’t stand it; I don’t even really like going there for conferences.
And, the family friendly stuff does get a bit old. I’m no fan of Vegas, but, hey, at least I can see the allure of that place. Orlando? I don’t get it.
+1 MikeFink
I’ll never understand why Charlie Crist appointed you Chairman of the Central Florida Tourism Association.
Michael,
Some of the resorts are pretty nice (to see). I’ve learned my lesson about packaged vacations.
Disney has outsourced way too many jobs, so my warm fuzzy American family company illusion is over. I live within driving distance to Burbank, Ca., their headqtrs.
I’ve got an adult (mid-40s) coworker, married, no kids.
Him and his wife take two (2), one-week long vacations every year to Orlando to hang out at Disney.
I just don’t get it.
I read an article once that described how the DINK demographic is a a big one for DisneyWorld.
Different Strokes for different folks I guess. I know people who make at least one pilgrimage a year to Vegas. I personally hate the place, but obviously others like it.
I read an intersting story about how Uncle Walt originally envisioned DW. In the 60’s when he first got the idea for the park, the typical Northeasten Family vacation was a car trip to South Florida. UW, figured if he could build a Disney Land type park that would lure 10% or so of the traffic off the interstate for a day visit, he could make some money.
I guess you would say it exceeded his expectations. Been there once with the kids, won’t go again, ever, for any reason. At least in California, you don’t die from the heat.
I’ve always considered Lost Wages the tackiest place on earth. It’s boring. If I want to see a show, it’s at an outdoor venue like the Hollywood Bowl for me. It’s the outdoor-zy thing. I like fresh air. (OK, that’s an oxymoron, living in So Ca.) Of course, being a cheapie, I like bringing my own food.
“He and his wife take two (2), one-week long vacations every year to Orlando to hang out at Disney.”
What a nightmare. My brother did that with his wife. The only way I could handle that would be on mshrms the whole time.
UW, figured if he could build a Disney Land type park that would lure 10% or so of the traffic off the interstate for a day visit, he could make some money.
I think he had bigger plans than that. They did buy over 30 square miles of land, a bit of overkill if all he was planning for was Disneyland East.
What a nightmare. My brother did that with his wife. The only way I could handle that would be on mshrms the whole time.
Hah! I’ve only tried that at Busch Gardens …
Come on. DisneyWorld is the object of your scorn as well?
I don’t think I’ve ever met anyone who outright has hostility towards it. Or a water park(!?).
Sure I can see DW not being everyone’s cup of tea. But outright hatred of a theme park or water park….that’s just weird.
Sure I can see DW not being everyone’s cup of tea. But outright hatred of a theme park or water park….that’s just weird.
*Chuckle* Why, it’s like being against the American Dream! Next we’ll be telling people it’s better to rent than to buy an overpriced house.
I’m no fan of theme parks, or of Orlando in general, but this is probably due to the weather. It was much colder than normal in Florida this January through March.
True, SFC. It was pretty frosty here this winter. I liked it, but it was a bummer for many. But hey, the way the weather is right now, this summer promises to be a real steamer, unless that second volcano in Iceland blows its top. If that happens, and we have “global cooling”, Florida’s housing market will recover, LOL.
It might also be that would be visitors are postponing their trips in anticipation of the new Harry Potter section that will open this summer in Universal’s Islands of Adventure.
I say this because from what I have heard attendence is holding up ok at nearby Disneyworld.
Bulletin for ShackOwners- 9 days left before the $8k tax credit expires. Your only hope of offloading your shanty at a grossly inflated price is sunsetting rapidly. Come May 1, the tire kickers, empty pockets and others who don’t care what the sale price is are GONE. Prepare to make major downward adjustments to your price.
Bulletin for RealtWhores- You have a fiduciary obligation to a transaction and when you deliberately misrepresent the value of an asset, you’ve committed fraud. Fraud is a felony. You’ve been committing fraudd for many years, with the help of a sleeping DOJ unwilling to bring indictments under RICO statutues.
Yep Exeter, there are some of out here still “waiting it out”
I think the big drops in prices on Resales will come about mid-June, when homes that don’t “sell” in the next 9 days.
By mid-June, when no one has come around to look at their Shacks, the smell of desperation may begin….
Driving around North Dakota since Monday afternoon. Very low unemployment rate. Housing so tight that the out-of-state workers are filling up the motels. AND YET in little tiny towns that ARE within reach of the (wind/oil/ag) jobs, there are plenty of houses for sale. That suggests that even here, house prices are not in line with rental rates.
SO why aren’t they building more houses. There certainly isn’t a lack of land.
The only bad thing AZ is that you still have to live there. My niece is going to school in N.D. and I do not envy her. There may be jobs in Siberia but you may not get a lot of applicants.
Weather in N.D./S.D. = blech. I don’t care what the unemployment rate is. Winters must be a paradise to live through.
Probably why there are a lot of renters. The construction jobs are going to disappear sooner rather than later. Try selling a North Dakota house between September and May.
Wind/Oil/Ag jobs are temporary for the most part. People rent because they know they won’t stick around for too long. Their decision to rent has to do with that and not the prices of houses.
My company does work for states & municipalities through the public bid process, and it’s becoming pretty clear the RFP pipeline is drying up. Lack of rev/depleted stimulus?
Are we supposed to know what “RFP” means??
Call me clueless…..
Request for Proposal
It’s the way that government (and some big companies) make big ticket (usually 100K+ is a min, with the “sky” being the limit) purchases. It’s a process where they put out all their requirements in a document and then invite people to bid on the services/hardware/etc. They then use some evaluation criteria (cost, ability to deliver, solution design, or, in FL, who’s lining the politicians pocket) to select the winner, who is then typically awarded the contract.
Haha, and Florida has the most required affidavits of all the states, including a non-collusion affidavit. Gee, I wonder why that is…
“… its becoming pretty clear the RFP pipeline is drying up.”
Yep. Everybody’s broke. No money means no spending which means no jobs which means no money which means no spending …
Etc.
And the solution is …?
Fire up the printing presses and keep “stimulating”?
States don’t have printing presses. Federal government can’t pass much more in the way of stimulous, at least not until the unemployment really spikes up again and it can’t be explained by people who were discouraged starting to look again.
12% might do it. 15% almost certainly would with this Congress (but we won’t get there by November). No idea what will be possible under the next Congress. For now, extending unemployment benefits is all the stimulous you are getting.
stimulous = stimulus
States don’t have printing presses.
True, but is there anything really stopping Fed helicopter drops of money? Or could the Federal Reserve buy bonds a near 0% from the individual states?
Is that a volcanic dust cloud on the morning horizon?…of dust particles of WAR?
“And the solution is …?”
Take advantage of the real estate bust, get out there, and start investing before home prices rise!
=======================================================
Time ripe to buy US homes before prices rise -poll
Wed Apr 21, 2010 8:00am EDT
By Lynn Adler
NEW YORK, April 21 (Reuters) - Most consumers think U.S. homes are affordable and the time is ripe to buy as many expect prices to rise in the next year, a new survey showed on Wednesday.
U.S. home buyers remain worried about the economy. But with average home prices down about 30 percent nationally from 2006, mortgage rates low and federal tax credits still in play, more than 80 percent of buyers see this as a good time to purchase, a Century 21 Real Estate LLC poll found.
The First-Time Home Buyers and Sellers survey by the Realogy Corp. unit polled consumers who bought or sold their first home within the past year or planned to do so within the next year.
“Today’s market presents a generational opportunity for home buyers and current home owners looking to leverage their market position,” Rick Davidson, president and CEO of Parsippany, New Jersey-based Century 21, said in a statement.
“… more than 80 percent of buyers see this as a good time to purchase …”
Lol. Do you think there might be a wee bit of bias in this statistical sample?
What makes you suspect this? Don’t you know an unbiased sample selection method when you see one?
The First-Time Home Buyers and Sellers survey by the Realogy Corp. unit polled consumers who bought or sold their first home within the past year or planned to do so within the next year.
Now is always a good time to buy or sell a home since housing only goes up!!
(Warning: comparing incomes to housing prices may invalidate the above statement.)
“Today’s market presents a generational opportunity for home buyers and current home owners looking to leverage their market position,”
This kind of econobabble got a lot of people in trouble.
InMontana….
What areas and/or states are you referencing?
All states. We bid & have clients all over the place.
Meanwhile, back at the private-mortgage scene:
You could not make this up.
http://www.news-journalonline.com/news/local/east-volusia/2010/04/21/mortgage-dispute-costs-man-most-of-his-finger.html
Holey Moley, that’s one of the most amazing stories I’ve heard in a while.
Holy manoly. I’m thankful that no one got killed, and that particular gentleman deserved to lose his finger.
Survey question:
This Rios guy told his lender that he borrowed the $3,500 he was using as a downpayment.
YES
NO
I’d go with….NO!
Partial fault lies in the $8k tax-credit for even giving a dirtbag like this a plan for his downpayment.
Man, what a Coxhead!
He’s lucky he got away with only a missing finger. I can’t imagine letting a man who threatened to shoot my daughter with a loaded gun while trying to break into the house get away alive if I had any choice.
Is he going to come back later? He’s out on bond and pissed.
Does anyone think the new accounting rules regarding no longer using “mark-to-market” have any correlation with every megabank posting record profits right on cue to promote “the Recovery”? Its like a broken record.
It’s like Monkey-See No Evil-Hear-No-Evil….
If the banks see no mortgage losses.. then… they don’t exist!!
Simple as that.
In the mean time.. all the $$ they make on the EZ money spread (borrow from FED for 0%.. walk across street.. buy 10-yr gov treasuries at 4%) makes their profits go through the roof!!
Then.. they all look like geniuses…. while we all toil in our insignificant daily drudgery (lives)
You mean they are not really geniuses? Then why the massive bonuses?
Extend, pretend, defend and taxpayers take it in the rear end.
Banks can make zillions “trading” their typical $300,000 losses in mortgages and home equity loans on deadbeat and underwater properties for wonderfully profitable postions using new “mark to fantasy” instead of the old school “mark to market”.
When is a duck, not a duck, but a herd of cattle instead?
Why, when you “call” it a herd of cattle; even though it waddles like a duck, quacks like a duck, and water rolls off the feathers on its back.
Does a one legged duck swim in circles?
Is it possible that the Fed bought up all the junk debt that megabanks had, making the banks whole? With banks able to borrow money from the Fed and loan it out at higher rates and without having the bad debt on their books anymore, that would make it possible to be quite profitable even without using mark-to-market. Maybe the mark-to-market change was just important to get banks over the hump until the Fed could bail them out.
Is it further possible that lots of the shadow inventory is now owned by the Fed via the MBS it bought? The Fed can certainly hold them for a long time since they have access to a money-printing press and can feed an alligator for a very long time.
Just some random, morning coffee thoughts. Enjoy your day everyone!
That is most likely, IMHO.
The Fed can do whatever it wants - what ever happened to the “audit the Fed” plan? You’d think we’d be hearing about if we were going to get any real financial reform! So, buying up all the empty houses and just sitting on them until they crumble seems logical; the losses magically vanish, the Fed can value them at whatever they want, AND they can sell the stuff off secretly to insiders if they want the land for some reason.
If you’re a Floridian and enjoy political theater, wow, just…wow.
http://www.miamiherald.com/2010/04/21/1590045/fbi-irs-launch-probe-of-florida.html
I’m trying to parse this in light of the contest between Crist and Rubio for the Senatorial nomination. The timing is interesting. Someone’s pissed at Rubio, that’s for sure. If you want to destroy someone or something, even if they haven’t done anything wrong, just unleash the FBI AND the IRS on them.
If I’m Charlie Crist, I’m slapping my thighs right now and having a good laugh.
“He was indicted on criminal charges that he stashed $6 million in the state budget for an airplane hangar for a friend and campaign donor.
In the federal case, Sansom and others could be charged with making false statements on their tax returns and tax evasion.”
For todays opening card it’s:
“TrueAnger™” -vs- “TruePurity™”
Place your bets…
There are Miami standards, and USA standards. If Rubio was using his AMEX under Miami standards, he could be in trouble.
Yep, Miami standards is what’s gonna get him. In a way, I feel sorry for him. Some of these politicians that are only a few generations removed from the Florida Straits don’t realize that certain things that are SOP in Miami, don’t work in other parts of the state. Having done business in Miami for many years, it’s a whole different ballgame.
It’s a cultural thing, actually. Doesn’t mean they’re bad people, necessarily, but it means there are some severe problems with assimilation, even generations out.
I’m sorry were they talking about St Petersburg, FL or Russia? Because this is the kind of stuff that Putin does, not a US president. At least up until now a US president didn’t send the FBI after political opponents 6 months before an election.
The last thing Obama and the dems want is Rubio in Congress. Charlie now, “we can do business with him”.
I gotta admit, the timing on this is really terrible, but then again, better now than after the election. It was bound to happen sooner or later.
Crist is the textbook definition of sleazy, opportunistic, say anything to get elected, stab your own mother in the back for a vote politician.
How anyone can vote for that guy is beyond me.
There is that about Crist. He’s a career politician, for sure. But when Romney, the neocon father of the new individual mandate American health care system endorsed Rubio, that was ball game for me. Better Crist than a Romney-indebted Senator.
Crist was about to run as an independent, no? And many (most?) pegged him to win as such. Wouldn’t the Obamanites much prefer an independent senator, pissed off and owing nothing to the Republic party?
Maybe the tin-foil hat conspiracy is right-wing elements of the FBI were called in to stop this from occurring?
The only thing surprising about this is the timing, which favors Crist winning as an establishment Repub, instead of a pissed-off independent. Cui bono?
Actually, what it does is give cover to Crist to run as an Independent, piously and sadly pronouncing his decision because of the “stigma that has been cast on the Florida Republican party” and thereby distancing himself from the problems.
Even if Rubio is abandoned by the pubs, it’s not advisable for Crist to run as second choice. He’s already been thrown under the bus by Romney, Jeb, McCollum and Mack. If I’m Crist, I’m going to go Indie, knowing that the party was ready to throw me to the wolves. He can’t run as a pub, it’d be suicide. He has enough support without the Florida Republican party. This Federal Investigation was a real gift to him, I hope he doesn’t mess it up.
We’ll see. I hope you’re right, but I’ve got a strange premonition about Crist returning to his flock (the Republics), crucified but risen again.
“Heather James and her husband, Travis, laugh as they move into their new condo at the Spire [in Denver] on Monday, when the building opened to residents. . . . 155 of the 496 units have sold.” Three years ago Glass House in Denver opened about 8 blocks away. It is essentially the same product, but right on the train tracks. 100% of the units were sold preconstruction at about the same price per square foot (averaging around $400 psf or more depending on views) . Last time I looked, 6 were in foreclosure after an initial steep runup in prices the first year. Not sure what they are laughing about moving into a hi-rise that was completed four months behind schedule and less than 1/3 are under contract. I’d be scared as hell. If they lose their job, find out they hate each other in their tight quarters, or that condo life sucks, they are competing against a developer who has 2/3rds of the units available. Can’t wait to have my tax credit expiration party in two weeks.
http://www.denverpost.com/business/ci_14917082
Californians may have to wait longer:
.. Arnold Schwarzenegger, signed into law last month California’s Home Buyer Tax Credit.
The law will provide $200 million for home-buyer tax credits, allocating $100 million for qualified first-time home buyers of existing homes and $100 million for purchasers of new or previously unoccupied homes.
OC Register: State now offering home buying credits
Purchase a qualified personal residence on or after May 1, and on or before Dec. 31, or purchase a qualified principal residence on and after Dec. 31, 2010, and before Aug. 1, 2011, pursuant to an enforceable contract executed on or before Dec. 31, 2010, and you will be able to take the allowed tax credit.
What interest does a state have in helping out national banks (the ones that benefit most from homebuyer tax credits) while burdening their citizens with debt? I used to think that CA was progressive.
They are “progressive.” In New Future, everyone will be paying more to support the banks and keep housing unaffordable. California is just leading the way.
OcBystander
$10K Ca Home Buyers Tax Credit isn’t like the $8,000- Fed credit. No check is issued to you. It just wipes out your state tax liability for 3 years. It’s such fraud imo, it’s not even funny.
The Franchise Tax Board website spills the beans. I wrote them an email, and they responded they were not responsible for the external media context. What a load…
(They are leading the Ca sheeples to slaughter.)
“I’d be scared as hell. If they lose their job, find out they hate each other in their tight quarters, or that condo life sucks, they are competing against a developer who has 2/3rds of the units available.”
If they lose a job, they get free mortgage payments for 6 months courtesy of Obama’s new foreclosure prevention plan. And unemployment benefits last 99 weeks.
If they decide they hate each other, they stop paying the mortgage and walk away in separate directions. And keep the $8K Obama money.
I don’t think they’re scared at all.
Homeowners can get second mortgages adjusted, too
http://www.usatoday.com/money/economy/housing/2010-04-21-secondlien21_ST_N.htm
(Junky newspaper imo, but worthwhile article.)
junky s/b junkie
A paper for junkies?
http://www.fool.com/investing/general/2010/04/20/shiller-the-housing-recovery-could-be-on-shaky-gro.aspx
Come on! Have a little faith. -and you call yourself a communist?
Cannot even begin to imagine the accounting shenanigans going on to make this possible:
“General Motors Co. has repaid the $8.1 billion in loans it got from the U.S. and Canadian governments….payments, made Tuesday, came five years ahead of schedule…”
This is like an FB fruit-picker with a $750,000 house paying it off in the first year.
http://finance.yahoo.com/news/GM-pays-back-government-loans-apf-1077915316.html?x=0&sec=topStories&pos=4&asset=2912065bf40defa9bf64747674d0431&ccode=rd
Remember that most (all?) of GM’s profit comes from GMAC (financing). The only reason they make cars is so GMAC has something to finance besides…mortgages.
Read the above discussion about mark-to-fantasy with the knowledge that GM isn’t a car company, it is a bank, and suddenly everything makes sense.
Lightbub!
Actually, GM only owns 9.9% of GMAC, the rest being owned by Cerberus (40%), the US Treasury (35%) and the rest is in a blind trust.
Briefly:
Gm borrowed $52 billion from the U.S. and $9.5 billion from Canada.
The bankruptcy deal allowed the $52 billion and $9.5 billion to be reduced to $6.7 billion and $1.4 billion respectively; the remaining billions was converted into common stock.
$6.7 billion plus $1.4 billion add up to $8.1 billion, the amount that was repaid to the U.S. and Canada.
So, where did this $8.1 billion come from? It came from the $52 billion and $9.5 billion borrowed from the U.S. and Canada.
In effect: GM sold to the U.S. and Canada $53.4 billion dollars of GM stock.
But GM didn’t exactly sell to the U.S. and Canada stock; it’s more like GM issued stock to the U.S. and Canada to be used as collateral for the remaining billions it borrowed.
GM plans on a stock offering, maybe this year, to build equity and raise money to pay back the billions it borrowed. Presumeably it will get back the stock the U.S. and Canada took in lieu on the billions it was owed. If that’s the case then the U.S and Canada won’t benifit from any GM stock price run-up, only GM will get that benifit. The only benifit the U.S. and Canada will get is the repayment of the loans they made.
At least this is how I see it.
Some of Gollum’s clients are mighty unhappy these days.
Bloomberg
Merkel Said to Want to Shun Goldman Amid Fraud Suit (Update1)
April 21, 2010, 9:27 AM EDT
By Rainer Buergin
April 21 (Bloomberg) — German Chancellor Angela Merkel’s administration wants to avoid awarding new business to Goldman Sachs Group Inc. pending the outcome of U.S. regulators’ fraud suit against the firm, a government official said.
A decision to curb business with Goldman Sachs would be considered if the Securities and Exchange Commission allegations are proven, said the German official, who declined to be named because the matter hasn’t been considered by Merkel’s Cabinet.
The remarks come as politicians in Europe squabble over doing business with Goldman Sachs, underscoring the limits of rhetoric. In Germany, Goldman Sachs remains a primary dealer of bunds and underwriter for the KfW state development bank, spokesmen for the institutions say. U.K. Chancellor of the Exchequer Alistair Darling rejected calls to bar the New York- based investment bank from government work.
Germany’s BaFin regulator is in contact with the SEC to seek further details of Goldman Sachs’ involvement with IKB Deutschland Industriebank AG, Finance Ministry spokeswoman Jeanette Schwamberger told reporters April 19. IKB was Germany’s first victim of the U.S. subprime mortgage crisis in 2007 and was bailed out with almost 10 billion euros ($13.5 billion) by KfW Group to shore up the German banking system.
…
Surprise! The SEC’s weak assed case is melting away, imagine that.
Testimony Could Undercut SEC Charge Against Goldman
cnbc April 21, 2010
The government has testimony from a Paulson & Co. official that could contradict its own claims against Goldman Sachs, CNBC has learned.
Paolo Pellegrini told the government that he informed ACA Management that Paulson intended to bet against, or short, a portfolio of mortgages ACA was assembling.
If true, the testimony would go directly against government claims that ACA did not know Paulson was hoping the collateralized debt obligations would fail, and subvert charges that Goldman (NYSE:GS - News) breached its duty by not informing ACA of Paulson’s position.
Well, at least the government tried. I feel better knowing our leaders are watching closely.
Which management? The CFO, or the manager of the janitors?
When did he tell them? On a vice mail message on Sunday night before Christmas?
And what was everyone else at Paulson & Co and Goldman Suks saying at the same time?
“The war on drugs keeps our prisons full to bursting at great expense to taxpayers, but also at great danger to the public at large when the real criminals, the murderers, the rapists, the child molesters, are let out to make room for non-violent drug offenders.”
~Rep. Ron Paul
I’m in full agreement with the libertarians on this one.
Wonder what it would take to get the PTB to admit that the ‘war’ on drugs is a failure?
Never happen I guess.
When there is more money to be made selling it and taxing it than there is in pretending that we’re fighting it.
With apologies to George Clinton and the P-Funk Allstars.
“Party people over here, over there and sh1t!” I had tinntinitus for two days after a P-Funk show and have worn earplugs to concerts ever since. But what a show!
MrBubble
But what a show!
Tear the roof off the suckah!
If you think about it, the libertarian position in the war on drugs is essentially the same as the position on free market economy. That being - it can be abused, and people can get hosed when it’s abused, so therefore you better be careful and take responsibility for your actions - think about things before doing them.
With drugs, one can get high and drive and wreck and maybe kill someone. On the surface this appears to make the case for illegality of drugs, and the implicit enforcement thereof (i.e. the War on Drugs). However the libertarian view is that if one’s thinking about doing drugs and maybe driving - one will remember that Uncle Billy Bob also did this, wrecked his car and died, and that therefore maybe it’s a bad idea, and decide against it. Thus responsibility comes as a result of thinking about consequences, not of following the law.
Same thing with financial markets. If Uncle Billy Bob invested his life savings into some poorly-thought-out investments - e.g. an irresponsible bank, and then said bank went belly up and Billy Bob lost his life savings, then it makes one think twice before putting money into poorly-thought-out investments.
The key to all this is proper - i.e. appropriately harsh - punishment for irresponsible behavior. People who do drive high and kill someone should be put in jail - for a very, very long time. They should not be given second and third chances. Likewise banks who invest poorly and become insolvent should go bankrupt and lose all - not be bailed out. By bailing out drug abusers or banks, we take away punishment for bad behavior, and thus take away the incentive to avoid such behavior.
That’s why I don’t think a position of less-regulation-on-drugs but more-regulation-on-banks is a valid one. It’s not a cohesive position. It makes the assumption that government knows best when it comes to financial matters, but not when it comes to drug matters.
The key to all this is proper - i.e. appropriately harsh - punishment for irresponsible behavior. People who do drive high and kill someone should be put in jail - for a very, very long time. They should not be given second and third chances. Likewise banks who invest poorly and become insolvent should go bankrupt and lose all - not be bailed out. By bailing out drug abusers or banks, we take away punishment for bad behavior, and thus take away the incentive to avoid such behavior
Here’s the problem
The banking car reck can take a decade or more to occur
The CEO during that time can make obscene money, that’s right I said it Medved, obscene.
Then when the bank is shut down he can walk away a very rich man (See Mr. Fuld from Lehman). Thus the CEO may have little incentive to lend prudently or limit leverage. He can use bank resources to buy off the watchdogs. Board member complains, then give him a 0% loan for a million or let him default on a massive loan without going after his resources. Mom and pop have no chance of understanding bank function. So when they see banks start collapsing and neighbors loose money they will immediately go to their bank and withdraw all their money and plow it into things that are harder to steal. (This assumes we do away with FDIC insurance as well as regulation) Soon we have a country of goat hearders.
Nope the only thing that will keep the banker in line is the threat of jail or massive fines, these of course require rules and regulations.
Likewise for the drug addict, I would throw people in jail not just for having an accident but for driving at all under the influence. No second chances. If you do it again you loose your license for a decade after your jail time is served. Three strikes and your out accident or not. Commit a crime under the influence of drugs go to jail for crime and for commiting a crime under the influence. Eventually all the idiots are in jail, those that can use responsibly are providing a nice tax revenue to support the jailing of the idiots.
The CEO during that time can make obscene money, that’s right I said it Medved, obscene.
Then when the bank is shut down he can walk away a very rich man (See Mr. Fuld from Lehman).
I don’t give a rats patootie about how much money the CEO makes from the deal, as long as it’s done legitimately - i.e. without fraud. In the case of fraud then yes the CEO should go to jail. Fraud isn’t allowed in a free market system. If not - if the CEO made his money via excessive risk that goes bad, then more power to him. The investors and the BOD should have known better than to hire someone would make such bad decisions. And they should have more visibility into what the CEO is up to so they can stop him before it gets too far. And I’ve now learned my lesson from Uncle Billy Bob to not invest in companies that have scummy CEO’s.
I don’t give a rats patootie about how much money the CEO makes from the deal, as long as it’s done legitimately - i.e. without fraud. In the case of fraud then yes the CEO should go to jail. Fraud isn’t allowed in a free market system.
First you have to define fraud
Then you have to find fraud
Then you have to prosecute fraud
Sounds like regulation and enforcement and a job for government.
First you have to define fraud
Then you have to find fraud
Then you have to prosecute fraud
Sounds like regulation and enforcement and a job for government.
Something the ‘deregulators’ can’t seem to grasp. Somehow the ‘free market’ will kick out all ne’er-do-wells. Just like it never has before.
Sounds like regulation and enforcement and a job for government.
I agree.
Show me where I have ever stated that we should have no regulation and/or government.
“The war on drugs keeps our prisons full to bursting at great expense to taxpayers…”
Here’s a response from the AARP: “Our members spend $300 BILLION annually for drugs,… they’re decent, honest, taxpayers with an ailment, Social Security & Medi-care.”
Free the weed! Then lock up the debtors.
Yesterday Nova Re Supernova posted a link:
http://www.larouchepub.com/pr/2010/100419banks_flunk_test.html
It basically said the big-bailed out banks only make money now by casino type endeavors that Glass-Steagall would have outlawed. Quote: “Glass-Steagall-type regulations must be re-instituted—quickly”
Then REHobbysist commented: “It’s interesting that a libertarian publication would come out strongly in favor of FDR-era regulation.”
I agree and it strengthens my belief that things are not always what they seem and here are some examples:
1. The Republican Party (the late party of capitalism and free-markets) has done more to bastardize and destroy American capitalism (by encouraging monopolistic, crony-corporatism,) than the Democrats have.
2. Glass-Steagall (FDR-era regulation) actually promoted economic liberty and freedom better than its repeal because those regulations kept more Americans “free” from the preditorial, monopolistic bank’s grip on their daily lives and actions. It is apparent that certain regulations can promote liberty and freedom and sometimes the lack of rules can enslave people.
3. America’s “free-market” private health insurance harms entrepreneurial capitalism in that it hinders private business formation, job changes and risk taking. Why? Because we are all too beholden to and afraid of the providers of our health-care and this shackles capitalism.
4. Generally, the right is opposed to governmental control and the right has been more in favor of business over government. HOWEVER, since now huge corporations control our government, the right is the new left in that they fully support this takeover. (They are now “pro-government” control if one accepts the fact that big-corporations control our government)
Conversely, when the left now seeks to pass new regulations and laws to reign in Big-Corporate control of our government, the left becomes the new right because these new regulations would actually lessen the power of our actual governors (big business).
We might be too far-gone but like it or not, right now, our government is the only thing that has even a chance of lessening the control of our corporate governing masters.
yeah.. Business is evil. Remove any influence business has in government. We need a government which has absolute control. Government will save us.
Absolutely! Absolute gubmint control is the only/final solution. Problem solved, to easy…next.
Absolute gubmint control is the only/final solution.
Hey wmbz,
Now is that really a well thought out reply to my post?
Did you take Joey’s baseball dialog/straw-man course posted below too?
If I were trying to influence people, I wouldn’t use straw-men type tactics.
The reason why, although it fires up the base, it turns off people on the fence.
Joey you do realize we live in a democracy still.
Are you really supporting the idea of unlimited campaign contributions, and revolving door of politician/regulator to highly paid Wall STreet lobbiest ??
measton.. If given the choice between living in a world controlled by politicians or one being controlled by capitalists, I’d choose the latter.
In fact, being a firm believer in capitalism, the greater the influence capitalism has over our government, the more I like it.
Um, you do realize that a “pure capitalist” and a “pure politician” are basically the same thing, right? Both will do whatever it takes to get to the top, including selling you up the river.
This whole mess we’re in is an example of poorly regulated capitalism run amok, supported by politicians. Both groups are one and the same, and both are in on it.
Pondering.. If you have some vision of a world without politicians and without capitalism (or some variation thereof) please share it. I doubt there can exist such a world, but I’m not complaining.
Of course “they” try to sell us up the river. Everyone is trying to sell everyone else up the river. There’s nothing new in that. Understanding things for the way they are is half the battle.
Some people want to change the system “for the better”. Go ahead and change things. My only concern is for me to adapt to whatever changes might be made.
Sometimes I’m amazed at the level of cynicism on the HBB. Can we tone it down a bit - at least to a sensible level? Not every politician is out for ultimate-power-at-all-costs, and not every capitalist is out for ultimate-riches-at-all-costs. The vast majority of people at least do have some level of principles, and that includes politicians and capitalists (some bankers even! yes, believe it or not).
The key is (agreeing with joey here) - would you rather live in a world where you’re controlled by physical coercion (e.g. the police) or by mental coercion (e.g. advertising)? I choose the latter. That to me is a little easier to overcome. I can choose to turn off the TV, close the magazine, etc. I can choose to just not give my money to a capitalist organization if I don’t agree with how they spend it. I cannot however choose to say “no” to the IRS and police when I disagree with where my tax money goes.
If given the choice between living in a world controlled by politicians or one being controlled by capitalists, I’d choose the latter.
Wow that has to be the dumbest statment of the year.
You would prefer to have the rules controlled by an unelected group of elite over someone who has to get your vote every 2 to 6 years.
Unless of course you think the capitalists should compete for your vote in a democratic system. In which case they are, can’t think of the term, oh that’s it politicians.
measton..
Capitalists compete 24/7 for something at least as important as my vote, and in some ways more important.. and that’s my money. They provide me what I need and want or I spend my money elsewhere.
Under capitalism, I and my fellow money-spenders make the rules.
Wow that has to be the dumbest statment of the year.
You would prefer to have the rules controlled by an unelected group of elite over someone who has to get your vote every 2 to 6 years.
Unless of course you think the capitalists should compete for your vote in a democratic system. In which case they are, can’t think of the term, oh that’s it politicians.
Wallets have a lot more voting power than ballot boxes.
Since when did corporations make “rules”? I don’t remember any laws being passed by Microsoft, Google, etc. I use these entities by choice, not by force.
Yes obviously corporations have influence over laws. But guess what? They don’t write the laws. They have to use politicians to write the laws for them! Thus if you take away the power of politicians - i.e. by reducing the size of government - you also reduce the power of corporations! Imagine that! Now they have to coerce you into buying their product by choice, rather than by force.
Wow that has to be the dumbest statment of the year.
You would prefer to have the rules controlled by an unelected group of elite over someone who has to get your vote every 2 to 6 years.
Unless of course you think the capitalists should compete for your vote in a democratic system. In which case they are, can’t think of the term, oh that’s it politicians.
Wallets have a lot more voting power than ballot boxes.
Since when did corporations make “rules”? I don’t remember any laws being passed by Microsoft, Google, etc. I use these entities by choice, not by force.
Yes obviously corporations have influence over laws. But guess what? They don’t write the laws. They have to use politicians to write the laws for them! Thus if you take away the power of politicians - i.e. by reducing the size of government - you also reduce the power of corporations! Imagine that! Now they have to coerce you into buying their product by choice, rather than by force.
I don’t know why you don’t get this.
(P.S. I think I accidentally submitted this post before quite finishing, so it may show up twice).
Under capitalism, I and my fellow money-spenders make the rules.
I used to believe that, until I saw the corporatists get their way time and time again.
Under capitalism, I and my fellow money-spenders make the rules.
Don’t confuse capitalism with free-market system. A capitalist system can certainly exist without being free market. That’s pretty much what we’ve got here in the U.S., in fact.
Yes obviously corporations have influence over laws. But guess what? They don’t write the laws.
It’s a bit more complicated than that. Google: “lobbyists write laws” I could list 40 articles on how corporations “write” laws.
Thus if you take away the power of politicians - i.e. by reducing the size of government - you also reduce the power of corporations!
I don’t think that it would take a bigger federal government to reduce the power of corporations. It would take laws, serious campaign finance reform and enforced regulations none of which need to increase the size of the government. It would take greater funding of some regulatory agencies but that’s peanuts. We could just build a few less weapons to balance it out.
We had a smaller federal government in the 50s but we had a very progressive tax system, a highly regulated banking system, less corporate influence and we had rules that were enforced.
I don’t see why taking our government back from the corporations has to mean a bigger federal government either.
1. Capitalists don’t always compete for your money. Look up oligopoly. Did the Wall Street Banks compete for your money? Well they got it. Do you use a Microsoft product on your computer, not much competition there. Did the people of California get competition when Enron manipulated the market?
2. I have nothing against capitalism, but again state that capitalism without rules leads to a society of goat hearders, would you put your money in a bank that didn’t have to report accurate info to investors or clients, who was completely unregulated and could leverage to any amount it wanted without telling you, with no FDIC insurance. My guess is no, and you would have no reliable info on any bank thus most people will stick their money in goods they can keep in and around the house, this would lead to a very poor allocation of resources and very poor liquidity. You need rules, you need gov to set rules, you need gov to enforce rules, you need gov to be accountable to the people and not overly influenced by the powerfull entities it regulates. The fact that our system failed is not daming of rules and regulations its daming of the fact that corporations have too much control of our gov.
The only system that can exist without gov and rules is barter and war mongering.
..capitalism without rules…
measton..
I have no idea where your imaginary capitalist free-for-all exists, but our system is inundated with rules, regulations, oversight, fines, fees, penalties, controls and innumerable laws. Not enough to satisfy you perhaps, but you can’t please everyone.
Then we agree
We need government, regulations, and enforcement.
We need effective government regulation and enforcement.
We need to avoid excessive regulation.
Now should we put corporations in charge of writing the rules or should we have elected representatives do this??
Since politicians are no better than prostitutes who sell their services to the highest bidder, and corporations, special interests or lobbyists do the bargaining for us, I have absolutely no problem with it.
Then we agree
We need government, regulations, and enforcement.
We need effective government regulation and enforcement.
We need to avoid excessive regulation.
I agree with all. Anyone who doesn’t is a fool.
The problem is that third item there - we all have different (often vastly so) views of what constitutes “excessive regulation”. For instance IMO the very existence of a central bank meets that criteria, let alone beefing up its power.
Now should we put corporations in charge of writing the rules or should we have elected representatives do this??
Personally I don’t think it makes much difference. The elected representatives are the only ones who can legally vote on the laws. The key is making sure that there’s adequate transparency about what’s in the laws, and adequate time to debate them - things which have been in very short supply lately.
(Including going back into Bush’s tenure)
yeah.. Business is evil. Remove any influence business has in government. We need a government which has absolute control. Government will save us.
Gee wiz, lol, you argue points weirdly. Is there a course training for this?
GldmnScs Blogtroll 101 Page 32. Sample dialog and ways to sidestep issues and utilize straw men tactics when confused or talking points are threatened.
Someone: Baseball is hard to undertand.
Joey: Yea right, baseball totally sucks huh?
Someone: No, but it’s complicated.
Joey: So you’re against America’s pass time and un-American right?
Someone: But I never said that. It’s just harder to figure out than other games.
Joey: Yea right, baseball is evil. Socialist soccer will save us. We need to outlaw every sport but soccer right? And then put all baseball players and their children in jail?
Someone: (thinking) wtf?
LOL
What was weird or confusing about my post? I responded directly to your conclusion:
..our government is the only thing that has even a chance of lessening the control of our corporate governing masters.
You prefer a government free to do whatever it pleases without restraints imposed by “corporate masters”. I prefer government be constrained by whatever means..
Check out this type of non-logic and twisting of points:
Rio: (Me)..our government is the only thing that has even a chance of lessening the control of our corporate governing masters.
Joey (Them): You prefer a government free to do whatever it pleases without restraints imposed by “corporate masters”
Joey, you must really underestimate the intelligence of the readers of this blog.
Your twisted black and white conclusion does not represent my nuanced, qualified, and limited statement.
Look up the words “even a chance of lessening” that are in my conclusion.
But you know all this. You are just a straw-man chucker. Like this.
Someone: Football should not have calls reversed by instant replay.
Joey: Yea, right, no rules at all huh? Let them bring guns right? Guns will save football huh?
LOL. Great take-down, Rio. Next straw man, joey?
That’s pretty good Rio. The redutio ad absrdam/y’all hate ‘Merica argument often rubs the wrong way.
absrdam = absurdum
Pot and prostitution are legal in absrdam.
As well they should be.
Amsterdam is currently trying to do away with both.
Then REHobbysist commented: “It’s interesting that a libertarian publication would come out strongly in favor of FDR-era regulation.”
Here’s my response (posted too late):
Lyndon LaRouche libertarian? LOL - not hardly. He’s got quite a Marxist and anti-semitic history. In general he’s just got a bunch of wacko ideas, some of them very much not libertarian - e.g. he’s in favor of a government-run national bank, colonization of Mars, among other things.
colonization of Mars, among other things.
I had no idea about that stuff about him.
But I for one am totally in favor of the colonization of Mars too.
(With the proper banking regulations in place of course)
Mars is no place for a vampire squid. Fossilized Martian amoebas have no monetary resources to plunder.
* The Wall Street Journal
* REVIEW & OUTLOOK
* APRIL 21, 2010
Son of Sarbox
Republicans can oppose the Dodd bill—and the big banks.
Our postpartisan President came out swinging this weekend at Senate Minority Leader Mitch McConnell, claiming in his now familiar ad hominem fashion that the Republican had decided to oppose the Democratic financial reform bill only after meeting with bankers. This takes some nerve from a President whose own bill would expand federal bailout authority, and the good news is that the GOP leader still has 40 colleagues marching with him—enough to force Democrats to negotiate if they really want a bill.
We hope Republicans stick together, despite Mr. Obama’s unpresidential catcalls, because Senator Chris Dodd’s bill looks to us like a souped-up version of the Sarbanes-Oxley bill of 2002—that is, a collection of ill-understood reforms whose main achievement will be to make Wall Street even more the vassal of Washington, raise costs across the economy, and do little to reduce financial risks. The rush to pass it even before the Financial Crisis Inquiry Commission finishes its work is about claiming one more legislative victory before Democrats find their majorities reduced or gone in November.
We’d prefer to see Congress go back to the drawing board, but if we’re going to get a bill then Republicans have an obligation to make it less destructive. The Democrats and their media allies seem to think the politics is on their side because they can link the GOP to the banks, and Republicans will splinter. They also said the same thing about health care, until more Americans understood the facts.
…
“Schumer wants financial reform bill to include a bank tax. The idea, which was proposed by Obama but is disliked by Chris Dodd, would impose a 0.15% tax on liabilities of large financial institutions. Obama predicts that this would raise $90 billion over the next decade. Meanwhile, banks remind us that any imposed taxes would ultimately be passed down to the customers”.
~ clipped from Neal Boortz
Meanwhile, banks remind us that any imposed taxes would ultimately be passed down to the customers”.
Yep
Don’t bail us out and it’s armagedon
Regulate us and the whole thing will crash
Tax us and will stick it to the little guy, those bonus payments have to continue.
“If you believe that when the rich get richer, the poor get poorer, then you believe that creating wealth causes poverty, and you’re an idiot,” says Michael Medved. “One of the things that I hate is this term ‘obscene profits.’ There are no obscene profits … . (The current economic downturn shows) “that when the rich get poorer … everybody gets poorer.”
< I lifted this comment by Michael Medved from a short commentary by John Stossel, the TV commentator who has won a string of awards telling his viewers how the business world really works. He’s out of step with the majority of *media people who still cling to the old Robin Hood idea that taking from the rich and giving to the poor is the only “fair thing” to do.
*(Unless of course, it’s their money)
If you believe that when the rich get richer, the poor get poorer, then you believe that creating wealth causes poverty, and you’re an idiot,” says Michael Medved
All depends on how the person got richer.
If that person got richer by suckering a bunch of investors and governments with exploding MBS and CDO’s. Then dumped all their losses on the tax payers sholders. I’d say that when the rich get richer the poor get poorer.
If that person created a product, or a more efficient manufacturing plant then when they get richer so do the rest.
The problem is that many of the top managers have not created wealth, they have stolen it.
I know that this is ad hominem, but Michael Medved is pretty much an idiot. What are his qulaifications again? Isn’t he some talk show host? That’s like quoting the guy wearing the sandwhich board shouting about hell-fire outside my offic (all day). Zero credibility. But it’s ad hominem, so it doesn’t hold much weight.
MrBubble
The “rich” in question got that way by basically gutting the ecnomy (outsourcing/insourcing jobs, unaffordable housing, toxic loans everywhere, etc.) So, yes, their gain has been everyone else’s loss.
The FACTS plainly show that the rich ARE getting richer and the poor ARE getting poorer.
Michael Medved is a sock puppet.
No wonder my favorite moonbat, Polosi is as kooky and bug eyed as she is, her face is paralyzed. Hope she doesn’t try vagazzling that may blow her eyes out of her head.
Botox may diminish the experience of emotion
Neuroscience • Psychology
DO you smile because you’re happy, or are you happy because you are smiling? Darwin believed that facial expressions are indeed important for experiencing emotions. In The Expression of the Emotions in Man and Animals, he wrote that “the free expression by outward signs of an emotion intensifies it…[whereas]…the repression…of all outward signs softens our emotions.” This idea was subsequently elaborated by the great psychologist William James, who suggested that “every representation of a movement awakens in some degree the actual movement which is its object.”
Botox, which is used by millions of people every year to reduce wrinkles and frown lines on the forehead, works by paralyzing the muscles involved in producing facial expressions. A study due to be published in the journal Psychological Science suggests that by doing so, it impairs the ability to process the emotional content of language, and may diminish the quality of emotional experiences.
Pretty tenuous thread to bang that drum. Strugglin’ comment.
That Botox (a highly dangerous poison) was ever approved is all the proof you need of how far gone our society is.
Tethered but safe: Chinese workers tie their youngsters up at work because they can’t afford child care ~ Mail Foreign Service
21st April 2010
Bewildered and tethered to a window these Chinese children reflect the desperate plight faced by migrant workers in the world’s most populous country.
Unable to afford even the most rudimentary child care, the parents have to bring their youngsters to work with them.
These images were taken in a factory in the city of Jiaxing in the south east of the country where the parents toil for ten hours a day. There are an estimated 110million migrant workers in China aged between 16 and 40 years old.
Read more: http://www.dailymail.co.uk/news/worldnews/article-1267794/Tethered-safe-Chinese-workers-forced-tie-youngsters-work-afford-child-care.html#ixzz0lkYQZQzu
Tethered but safe: Chinese workers tie their youngsters up at work because they can’t afford child care ~ Mail Foreign Service
21st April 2010
Yes but the wealth created by this slavery makes us all richer according to Medved above. We should just stop complaining. There is no such thing as obscene profits don’t you know.
Just waiting for the day that the Chinese are subject to the same workplace regulations that we are. Or vice versa. Until then - talk of “free markets” is so much blather.
Problem is that the table scraps that are thrown China’s way probably are preventing an all-out revolution there, which IMO is a bad thing. I venture that the late-80’s uprisings, culminating in the Tianamen Square protests/massacre, are what led in large part to the level of opening up of China’s economy that they’ve had. The government gives a few inches here and there in order to avoid having to give a mile via overthrow.
China: 1.3 Billion peoples
USA: 310 Million peoples
USA is the country with the worst problems that will very soon cause it’s Gov’t to implode & collapse.
(Think this line will get me in the “TrueAnger™” PeeParty tea toadlers front door with my tie-dye mary-jane shirt on?)
Kennels might work better IMHO. That way you could avoid annoying leash-tangles.
You’re right tangled leashes can be a real pain, slows down productivity having to stop working an untangle the kids. If they can’t afford a kennel perhaps one of those run wires would do. That could be a company perk, in lieu of $.
Shock collars with “invisible-fence”? -Just came to me.
More than 1,300 San Jose employees receive layoff notices
mercurynews.com
San Jose officials Tuesday notified more than 1,300 city employees — including more than a sixth of the full-time work force — that they are likely to be laid off or moved to other jobs later this year. City leaders say the unprecedented paring is needed to close a record $116 million operating shortfall.
The notices affect 1,123 full-time employees across all city departments, from police to parks to libraries. More than 450 would be laid off, while the rest would shift to similar or lower-paying positions. Hundreds of part-timers also would see their hours slashed or eliminated.
“This city has never had employee impacts to this degree,” said City Manager Debra Figone, who called the process
“heart-wrenching.” San Jose has covered past deficits largely by eliminating vacant jobs.
I wonder how many foreclosures that will turn out to be?
Fannie and Freddie Amnesia
Taxpayers are on the hook for about $400 billion, partly because Sen. Obama helped to block reform.
Now that nearly all the TARP funds used to bail out Wall Street banks have been repaid, the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac stand out as the source of the greatest taxpayer losses.
The Congressional Budget Office has estimated that, in the wake of the housing bubble and the unprecedented deflation in housing values that resulted, the government’s cost to bail out Fannie and Freddie will eventually reach $381 billion. That estimate may be too optimistic.
Last Christmas Eve, Treasury removed the $400 billion cap on what the government might be required to invest in these two GSEs in the future, and this may tell the real story about the cost to taxpayers. In typical Washington fashion, everyone has amnesia about how this disaster occurred.
The story is all too familiar. Politicians in positions of authority today had an opportunity to prevent this fiasco but did nothing. Now—in the name of the taxpayers—they want more power, but they have never been called to account for their earlier failings.
http://online.wsj.com/article/SB10001424052748704671904575193910683111250.html?mod=rss_opinion_main
Funny how so many smitten with Barry don’t bring up his 156 days and how he voted.
One chapter in this story took place in July 2005, when the Senate Banking Committee, then controlled by the Republicans, adopted tough regulatory legislation for the GSEs on a party-line vote—all Republicans in favor, all Democrats opposed.
Yeah but the GSE’s are already subject to stricter government regulation, and have CEO’s that don’t make insane bonuses like the ones on Wall Street, so nothing could go wrong with them.
Their CEO’s get millions of dollars a year. Less than Wall Street, but far more than anyone actually in the government, like, for example, the president.
Find another tree.
I hope you realize I was speaking tongue-in-cheek polly, addressing the various recent discussions about the evils of excessive bonuses as well as the virtues of more regulation.
“Now that nearly all the TARP funds used to bail out Wall Street banks have been repaid, the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac stand out as the source of the greatest taxpayer losses.”
Rule No. 1 for getting out of a hole: STOP DIGGING.>>
Treasury seeks public comments on reform plans for housing-finance system
By Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, April 15, 2010
Nineteen months after the government seized mortgage-finance giants Fannie Mae and Freddie Mac in what has become the costliest bailout of the financial crisis, the Treasury Department on Wednesday began the process of overhauling them.
But for all the drama associated with the takeover of the companies and the implications for the U.S. economy, Treasury unveiled a statement listing seven questions for the public about how to remake the nation’s housing-finance system.
Fannie and Freddie have played essential roles in the government’s strategy for reviving the housing market, but they have needed more than $125 billion in taxpayer aid to stay afloat. The companies guarantee that investors in home loans are made whole and lately have spent much of their time reworking mortgages to make them more affordable. The Obama administration has pledged unlimited financial aid to them.
The administration’s broadly worded questions seek commentary on the value of home ownership versus rentals; the role of government in providing funding for home loans and taking on risks; how government policy should account for differing needs for home loans across regions and income levels; and other topics.
The Treasury Department, preoccupied with the ongoing negotiations on Capitol Hill over financial regulatory reform, has reluctantly engaged the housing-finance issue in recent weeks as calls to begin the debate have grown louder from lawmakers on both sides of the aisle.
The department will gather comments through a Web site, Regulations dot gov, as well as public forums scheduled throughout the year. The administration has said it would like to make its legislative proposal early next year, after failing to meet a deadline earlier this year of producing a preliminary report on how to recast the nation’s housing-finance system.
“A well-functioning housing-finance system is critical to the long term stability of the housing market,” Treasury Secretary Timothy F. Geithner said. “Hearing from a wide variety of perspectives as we embark on this process is an important part of establishing a more stable and sound housing finance system for the American people.”
Why were the Democrats opposed? How convenient that was left out of the article.
“www.dailykos.com/storyonly/2008/9/20/21195/8886/22/605095
S190 was discussed in the Senate Banking Committee on July 28, 2005 with the result, “Ordered to be reported with an amendment in the nature of a substitute favorably”, which I believe is Congress speak for, “we don’t like this, please go rewrite it and we may reconsider”, i.e., the bill died in a Republican controlled committee and never came to the floor of the Senate or back to the Senate Banking Committee for reconsideration. S190 died in committee.”
And, hmmm, what a coincidence the official mouthpiece for (what’s the paper’s name again?), decides to sling a little mud just as new regulations are being put forward.
Hotel Conference Center May Trump Private Property in Eminent Domain Case FOXNews.com
In Auburn, New York, the city is threatening to invoke eminent domain to seize private property for a private hotel conference center, saying the public good outweighs the private property rights of some citizens.
Would you let the government take your car and give it to someone else? How about your computer, television set, house, or business? What if the government said you would be paid yet you had no choice?
That’s the dilemma in Auburn, New York, where the city is threatening to invoke eminent domain to seize private property for a private project -a hotel conference center, saying the public good outweighs the private property rights of some citizens. And it’s legal.
“This is abuse, it’s one case of eminent domain abuse,” says Renee Smith-Ward, owner of a dog grooming salon, Wag’In Tail, that could be plowed down for the hotel’s parking lot. “I don’t believe it’s right to take someone’s property away from them for a hotel, for a private developer.”
“These people just want to come in and steal it from you,” says property owner Michael Kazanivsky, who says he has dreams to build a family amusement center on what is now a grass and rubble filled lot. “They’re trying to take if from me,” he says bitterly, “it’s not right.”
Another excellent decision by the Supreme Court of the United Corporate America. As soon as they say that eminent domain can be applied merely because it increases tax revenue then any rich person can steal any less rich persons property with the promise that they will build a home or structure with a higher value.
+1
I think eminent domain is a valid principle, but only when it applies to public works infrastructure, and only if absolutely necessary. A hotel definitely doesn’t meet that criteria.
I think eminent domain is a valid principle, but only when it applies to public works infrastructure, and only if absolutely necessary.
One problem is that the definition of “public works infrastructure” keeps expanding, and ultimately anything can be justified this way. A century ago water supplies were handled by private firms, and no one would have considered them “public infrastructure”.
The other question is, who makes the determination of “absolutely necessary.” Courts have generally said the legislature pretty much has unlimited leeway in this regard. But even review by judges would hardly be an effective check. At a minimum, the private landowners should be entitled to a jury trial on this issue.
“…that eminent domain can be applied merely because it increases tax revenue”
Not just for the Billionaire’s & Company & “Friends”…but then, like Disneyland, they get the US taxpayers $$$$$$$$ to build a “Special” freeway offramp to…their front door.
TBTNGATS = “Too Big to not get a Taxpayer Subsidy”
(small business owners need not apply…)
IIRC Anaheim spent about a billion dollars to “spruce up” the area around Disneyland.
I last visited Anaheim in the 1990s. Looked to me like the immediate area was doing fine, but a few blocks away from D-Land? Beware.
“…spent about a billion dollars to “spruce up” the area around Disneyland.”
And yet the maids at their “cheap” Disney hotels…are continually on strike…
I just checked out the “buy vs. rent” calculator from the NY Times.
http://www.nytimes.com/interactive/business/buy-rent-calculator.html?src=me&ref=business
Based on the assumptions I put it, it is currently never better to buy than rent in Brooklyn. It would take some serious inflation in rents — or deflation in prices — to change that.
Cool calculator.
It would take me 17 years to break even w/a few homes I’ve punched in and that’s assuming NYS taxes never go up.
Bwa ha ha ha har ha ha ha! (ht pussycat)
Except……..exeter, exeter, exeter….this week I’ve seen hope. I’ve seen what looks like scared dump the place ASAP pricing.
(Ferris Bueller fuzzy feeling face) It’s happening.
That is GREAT Carrie.
Nice find! But start plugging in numbers and suddenly buying doesn’t pay for decades (ex. 650mnth rent vs 150K buy)
I tried some other number as well. It’s basically the same old rule, your mortgage should never be more than the nicest apartment you can afford on a single income.
Wow, did you see the new $100 bills? Do we have a huge counterfeit problem or is this just a clever way to make all those cash hoarders bring their bennies into the back so the government can keep tabs on whose holding cash and might be a good candidate for IRS audit. Will your pre 2010 vintage $100 always be legal tender or only good when you exchange them for crisp new fiat dollars?
I honestly don’t see why the Treasury would have a problem with counterfeiting. Less work for them to do. Stepping up “grass-roots-printing-presses” might be what this country really needs.
They do already, I always considered stock options as counterfeit money. Wealth created from thin air that dilutes existing holders. Just another form of inflation. I’ll still go with my first impression that this is another way for the FED to monitor the underground economy, drug money and counterfeit money too.
There was a great segment on MSNBC series “Greed” about the guy in S. Florida that counterfeited $7 million of mostly 100 bills using nothing more than a scanner, a compter and an ink-jet printer, and hairspray. He put them into circulation through the drug trade. They think he netted about $1 million. He might have gotten away with it if he’d stopped while ahead.
Airlines lose $1.7 billion, ash blame game begins
Airlines lose $1.7 billion; debate heats up whether 100,000 flights really had to be canceled April 21, 2010
BERLIN (AP) — Airlines lost at least $1.7 billion in revenue during the volcanic ash crisis, an industry group said Wednesday as the debate heated up over whether European governments were justified in shutting down their airspace for so long.
Planes were flying into all of Europe’s top airports — London’s Heathrow, Paris’ Charles de Gaulle and Germany’s hub at Frankfurt. Still experts predicted it could take days — even more than a week — to clear a backlog of stranded passengers after about 102,000 flights were canceled around the world.
Eurocontrol, the air traffic control agency in Brussels, said 21,000 of the continent’s 28,000 scheduled flights were going ahead Wednesday. Air traffic controllers lifted all restrictions over German airspace, but some restrictions remained over parts of Britain, Ireland and France.
Spain, which has remained mostly open throughout the crisis, developed into a key emergency travel hub, arranging for hundreds of special flights to move over 40,000 people stranded by the travel disruptions.
In London, Britain’s transport secretary, Andrew Adonis, denied that the government decided to reopen the skies to air travel under pressure from airlines.
It’s the lowest-common-denominator view by the governments involved. They are assuming that all the airlines/flight crews are too stupid to take measures to avoid/minimize the risk.
Heard today that a lot of these restrictions are being waived, if the aircraft has three engines or more, especially those operating trans-Atlantic. Unfortunately, about 99% of the airliners now are twin-engine aircraft.
Don’t look now but Greek 2-year bonds are now up around 8% - record territory - again.
Doh.
Can’t the corrupt US banksters just teach the dumb Greeks how to manipulate their bond market like ours. Problem solved. Duh.
You would think they would have learned by now. Our boyz operate in the wide open with the cesspools blessings, in front of God and everybody.
I have a feeling that we only get to see the tip of the iceberg when in comes to manipulating markets. Some insider will write a book one day and shock everybody.
check out FIASCO…by Frank Partnoy.
Can’t the corrupt US banksters just teach the dumb Greeks how to manipulate their bond market like ours. Problem solved. Duh.
Uh Goldman Sach’s already got caught doing this for Greece. They taught them how to hide debt.
Oompah!
Cool, one can only hope it blows again. The world is conditioned to look for one ‘crisis’ to the next. N.Korea=boring, Iran=boring, Somali Pirates=not so boring, Islamic terrorist kooks=slack&boring.
Threat of new, larger Icelandic eruption looms.
REYKJAVIK, Iceland-AP– For all the worldwide chaos that Iceland’s volcano has already created, it may just be the opening act.
Scientists fear tremors at the Eyjafjallajokull (ay-yah-FYAH-lah-yer-kuhl) volcano could trigger an even more dangerous eruption at the nearby Katla volcano — creating a worst-case scenario for the airline industry and travelers around the globe.
A Katla eruption would be 10 times stronger and shoot higher and larger plumes of ash into the air than its smaller neighbor, which has already brought European air travel to a standstill for five days and promises severe travel delays for days more.
The two volcanos are side by side in southern Iceland, about 12 miles (20 kilometers) apart and thought to be connected by a network of magma channels.
Katla, however, is buried under ice 550 yards (500 meters) thick — the massive Myrdalsjokull glacier, one of Iceland’s largest. That means it has more than twice the amount of ice that the current eruption has burned through — threatening a new and possibly longer aviation standstill across Europe.
Lawyer: TV Psychic Won’t Be Beheaded for Witchcraft in Saudi Arabia
The lawyer of a Lebanese TV psychic condemned to death for witchcraft by a Saudi court says he will not be beheaded. ~Associated Press
BEIRUT — The lawyer of a Lebanese TV psychic condemned to death for witchcraft by a Saudi court says he will not be beheaded.
May al-Khansa has told The Associated Press that Lebanon’s justice minister informed her that Ali Sibat will not be beheaded.
She said Wednesday that the minister Ibrahim Najjar had a meeting with the Saudi ambassador to Beirut, who assured him the execution would not take place.
The Saudi justice system, which is based on Islamic law, does not clearly define the charge of witchcraft.
Sibat is one of scores of people reportedly arrested every year in the kingdom on charges of practicing sorcery, witchcraft, black magic and fortunetelling, which is considered polytheism by the Saudi government.
Some-one/thing needs to bring this society into the 21st century. What a bunch of nitwits. We’re doing business with them?
No disrespect, just factual. Yikes.
not very multi-culti of you
“…practicing sorcery, witchcraft, black magic and fortune-telling”.
Guess the Wall Street crowd had better STFO of Saudi Arabia.
Improving economy squeezes truck driver supply.
BANGALORE (Reuters) - Talk of a driver shortage in the U.S. trucking industry has started to heat up, a sign that a recovery in the freight economy is well under way.
The truck driver crunch is a recurring phenomenon that tends to disappear when the economy is on the slide and freight demand falls, but resurfaces as soon as volumes begin to pick up.
Truck drivers and driver/sales workers make up one of the largest occupations in the United States, holding 3.2 million jobs in 2008, according to the U.S. Bureau of Labor Statistics.
Demand for truck drivers tends to follow the demand for goods; as a recovering economy opens up more attractive job opportunities, carriers stand to face a severe crunch in driver supply when they begin to hire again.
Recent quarterly results from freight transportation companies such as United Parcel Service (UPS.N), CSX Corp (CSX.N), JB Hunt Transport Services (JBHT.O) and Landstar System (LSTR.O) reflect improving freight demand.
Also, new regulations such as the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis (CSA) 2010, to be introduced by federal regulators later this year, could affect the driver pool.
The initiative aims to keep a close eye on individual driving records and carriers’ overall fleet records. A carrier with a poor safety record could be suspended.
FWIW, I’ve seen a lot more traffic recently, but its not necessarily freight traffic.
Maybe it’s those Arrow trucks finally heading back home?
All of this “driver shortage” talk must mean that trucking companies/shippers want to keep payscales down.
Like what I’ve been hearing for 35 years: “Pay/demand for aircraft mechanics is going to go way up, when the WWII/Korean/Vietnam/Gulf War guys retire…..”
Five hundred years from now, some overworked and underpaid interplanetary shuttle mechanic on Titan (or some other godforsaken moon of Saturn or Jupiter) will be hearing “Demand for interplanet shuttle mechanics is going to go way up, when those Romulan-Clone War guys retire……..”
Los Angeles mayor: ‘Painful’ cuts, layoffs needed to balance budget
April 21, 2010
(CNN) — Los Angeles Mayor Antonio Villaraigosa is proposing “painful” layoffs and service cuts to close a $485 million budget deficit as the city struggles to cope with an economy beat down by a recession.
“These layoffs and service cuts I have proposed will be severe and they will be painful,” Villaraigosa said in Tuesday’s State of the City address. “But let me be first to say, we can we do better. We can avoid many of these cuts and we can find better ways of protecting our fiscal health and balancing our budget.”
The budget proposal for the 2010-2011 fiscal year calls for “initiating layoffs of more than 800 employees” and reduces the number of full-time employees by some 3,300 when compared to year-ago levels.
Many positions on the city’s payroll have gone unfilled as employees have retired, quit or left their jobs for various reasons.
“We must all share in the sacrifice to stop the cuts in services and prevent further layoffs,” the mayor said. “We must all be willing to take cuts in our pay, increase our pension contribution, and contribute more to our health care plans.”
Green groups point to ash cloud silver lining.
21 Apr 2010 09:40:21 GMT
LONDON/OSLO, April 21 (Reuters) - Iceland’s erupting volcano has spewed plenty of ash but far less greenhouse gas than Europe’s grounded aircraft would have generated.
Carbon dioxide emissions totalled 150,000 tonnes a day in the early days of the eruption, according to Durham University. That compares with 510,000 tonnes per day emitted when planes are flying as normal over the continent.
But experts cautioned it was hard to draw conclusions about the overall impact of pollution because more cars and buses were on the roads to help stranded travellers and the volcano is emitting a nasty cocktail of toxins.
Europe’s skies were open for business on Wednesday after an ash cloud wrecked timetables for six days, stranding passengers and costing the airline industry $250 million a day. Ash can scour and even paralyse jet engines.
Planes add to global warming through emissions of carbon, other chemicals and their vapour trails, scientists say.
They also produce pollutants and noise around airports.
The first analysis of air quality around London’s two busiest airports, Heathrow and Gatwick, showed that pollutants which can causes respiratory problems had plummeted, said the London Air Quality Network.
“That entire signal dropped to zero (from Thursday through Saturday),” said Ben Barratt at King’s College London, who helps coordinate the Network’s data, referring to nitrogen dioxide.
“The quality of life difference is mostly down to noise, and we’re getting lots of emails saying how lovely it is,” he added.
Hmmm, carbon dioxide and greenhouse gasses have a cumulative impact. These “experts” didn’t even run their analysis correctly. They only looked at the short term effect of the ash clouds halting air travel. It stands to reason that an increase in flights will be necessary to get people to their destinations once the ash cloud lifts, so there will be more than the average 510,000 tonnes/day in the near future.
N2O usually combines with volatile organic compounds to form ground level ozone, which causes the respiratory issues. They are looking at the wrong monitoring data. They should be looking at the ozone monitor, not NO2.
Where is “fecal-time”? I miss reading that…
he took a bathroom break
This moron had a sweet gig and blew it. I guess Geico understands it sells ins.to any and everyone.
Geico voice actor fired after insulting tea parties
Washington Post,Wed, 21 Apr 2010
Sometimes you have a headline that makes the rest of the story superfluous, but here’s the background. Actor Lance Baxter, otherwise known as “D.C. Douglas,” currently known as the man who informs you how much Geico can save you on car insurance, left a message last month with FreedomWorks in which he asked the group how many “mentally retarded” people it had on staff and what it would do when a tea partyer “killed someone.” On April 14, FreedomWorks put his voicemail online.
If he didn’t say more than that and he didn’t identify himself as working for Geico, I’d say he has a nice lawsuit on his hands.
Nevin Shapiro charged in $900M Ponzi scheme ~ April 21, 2010
Nevin K. Shapiro, the founder and president of Capitol Investments USA in Miami Beach, has been arrested in New Jersey and charged by the Securities and Exchange Commission with allegedly orchestrating a $900 million Ponzi scheme.
The SEC alleges Shapiro, 41, sold what he called risk-free securities that would pay up to 26 percent interest to fund Capitol’s grocery diverting business. Shapiro and his business already have a consolidated case in U.S. Bankruptcy Court.
Grocery diverters purchase lower-priced groceries in one region and resell them for a profit to another region where prices are higher.
The SEC coordinated the filing of the civil charges with the U.S. Attorney’s Office for the District of New Jersey, which on Wednesday unsealed criminal charges against Shapiro, who surrendered Wednesday morning.
The indictment puts South Florida even further in the Ponzi scheme spotlight in the wake of Scott Rothstein’s $1.2 billion Ponzi scheme, orchestrated out of his Fort Lauderdale law firm, and the $7 billion scheme allegedly orchestrated by R. Allen Stanford, who had a key office in Miami. (Rothstein has pleaded guilty, but Stanford is contesting the charges against him.)
Many of the victims in Bernard Madoff’s $65 billion Ponzi scheme also were South Floridians. Madoff is serving a 150-year prison term.
Shapiro used money from 60 investors, mainly in Florida and Indiana, to pay for unrelated business ventures and fund his own lavish lifestyle, the SEC complaint states. When investors questioned Capitol’s business, Shapiro showed them fabricated invoices and purchase orders for nonexistent sales.
A local hero:
http://www.autoweek.com/article/20100212/GRAND_AM/100219940
We sometimes sell to companies in Florida. They automatically get put on COD or cash in advance.
Like said months ago, give it time and you’ll start seeing perp walks.
There’s just SO MUCH of it out there that it’s going to take time.
Architecture index reaches highest point in nearly two years.
Memphis Business Journal
The Architecture Billings Index continues to gradually improve, increasing to a reading 46.1 in March, its highest score since August 2008. The index was at 44.8 in February.
Through a monthly survey of member firms, the American Institute of Architects’ Architecture Billings Index indicates whether or not construction and architecture business inquiries are increasing. A score above 50 indicates an increase in billings, but the current score could mean the economy is closer to a recovery phase, said AIA chief economist Kermit Baker.
“Firms are still reporting an unusual amount of variation in the level of demand for design services, from improving to poor to virtually non-existent,” Baker said in a statement. “This increasing volatility is often a sign that overall business conditions may begin to change in the coming months.”
In Memphis, local architects are becoming more optimistic about business prospects, but they’re still waiting for that to translate into a positive for the bottom line, said Scott Fleming, principal of Fleming/Associates/Architects PC.
While the score is higher than it has been in the last few months, it still isn’t where architects want it to be.
“Been down so long it looks like up to me.”
ready, set, go…
Filed under: “None Dare Call it a CONspiracy”
New US $100 note aims to deter counterfeiters:
“Federal Reserve Chairman Ben Bernanke said U.S. officials will work to educate people around the world about the new design.”
“Unlike in the past, when most cash dollars were held domestically, as many as two thirds of Federal Reserve notes now in circulation are outside the United States, he added.”
(? does 2/3 = 66%?)
BEATING THE SUPERNOTE
“..In recent years, U.S. officials have been trying to combat the continued production of extremely high-quality counterfeit $100 notes they say are produced in North Korea, dubbed the “supernote,” which are undetectable to nearly all but the most sophisticated currency experts.”
“The old notes will be destroyed and replaced as they pass through the Federal Reserve system.”
“In the United States, the $20 note is the most frequently counterfeited denomination.”
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Looks like “Financial Innovation” has gone missing from it’s,… “1st do no harm” cage…
GoldenmanSucks Inc. (person) = “TrueFinancialCult™”
“Far more than the fraud element - what worries me is what was legal,” Wolf says, describing synthetic CDOs as “useless financial activity [which] adds nothing to anything useful in the world. There was absolutely no rational justification for the bet anyway.”
Furthermore, the ultimate losers of this “pure bet” were taxpayers in the U.S., U.K. and Germany, he notes. “I’m very sore about that…it strikes me as completely wicked.”
“…it appears as if Paulson and Goldman were running a “crooked roulette table,” something that would get you banned for life from Las Vegas. “The same should be true for financial markets.”
“Completely Wicked”: Martin Wolf and Simon Johnson on Goldman Fraud Case
Posted Apr 21, 2010 by Aaron Task in Newsmakers, Banking
I would think an up standing group like this could easily raise money in the private sector for their operation. Everyone should know about all of the wonderful work they have done with those tax dollars.
ACORN CEO: ‘We’re on Life Support’
Associated Press
NEW YORK - The head of activist group ACORN came to a federal court Tuesday to observe a legal fight over its funding and said the group was on “life support” after waves of bad publicity and an attempt by Congress to cut off its money.
Bertha Lewis, the chief executive officer for the group, said ACORN was getting by on about $4 million annually rather than its one-time $25 million budget and had reduced its staff to four, down from between 350 and 600 employees.
“We’re still alive. We’re limping along. We’re on life support,” Lewis said in an interview just after a government lawyer asked a federal appeals court to temporarily block a judge’s ruling that it was unconstitutional for Congress to cut funding to ACORN.
http://www.salon.com/news/politics/war_room/2010/04/07/rachel_maddow_acorn_tapes
Using the unedited tapes released by California Attorney General Jerry Brown of O’Keefe and Giles’s visits to ACORN offices in the state, Maddow showed the vast gulf between the conservative version of the “scandal” and reality
I loved the part about them portraying one guy as helping them try to smuggle teenage girls over the border for prostitution, when in reality the guy was trying to get info which he immediately relayed to police.
And let’s not forget the regulation passed by Congress to bar funding of the group was ruled unconstitutional, but the damage was already done.
Sin City Daredevils Can Take ‘Stratosphere’ Freefall From 829 Feet
Associated Press
LAS VEGAS — Visitors to the Stratosphere tower in Las Vegas no longer need an elevator to get down from Sin City’s highest building.
A new ride is giving daredevils a cable, a platform and a chance to jump to a blue and black target 829 feet below.
SkyJump Las Vegas has opened as the world’s highest commercial decelerator descent.
A cable line guides jumpers down from a metal platform, with views of the Las Vegas Strip along the way.
The ride was certified by Guinness World Records as the highest of its kind.
http://www.foxnews.com/us/2010/04/21/stratosphere-jump-opens-daredevils-las-vegas/?test=latestnews
So now Paulson is publicly announcing his bets? Has he morphed into Buffett? And what govt housing price support program does he know about that we don’t?
Hedge Funds
April 21, 2010, 2:21 p.m. EDT
Paulson & Co. turns bullish on housing, economy
After betting against mortgages, manager sees home prices up to 10% in 2011
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) — John Paulson, the hedge-fund manager famous for betting against mortgage securities, is now bullish on the U.S. housing market and the economy.
During a conference call with investors Wednesday, Paulson said he was concerned earlier this year about a potential double-dip recession.
Some advice for Goldman’s Blankfein
Mean Street columnist Evan Newmark explains to Dennis Berman why he thinks the deck is stacked against Goldman Sachs CEO Lloyd Blankfein, in part because the company has become a trading house.
“I’m not concerned about that at all today,” he said. It’s more likely there could be a V-shaped recovery, Paulson elaborated.
House prices have stabilized and could climb 8% to 10% nationwide in 2011, he added.
Corporate earnings are coming in ahead of expectations, the stock market is stronger and there’s a “vibrant” credit market. With the “final leg” of a rising housing market, “the outlook for 2011 could be very strong,” Paulson said.
…
publicly announcing his bets?..
doubtful..
A few weeks ago there was a blurb about him saying he recommended shorting the dollar and buying gold. If he’s “sharing his insights”, it’s almost guaranteed he’s moving the opposite way.
I read one of the books (the greatest trade ever?) about his exploits and he was absolutely paranoid about anyone discovering what he was doing with C D Swaps.
He confided in nobody but two or perhaps three of his closest associates. Everything he had was on the line..
Anyway, Paulson is no economic savant, imo. He had a conviction about the bubble, invented a way to bet against MBS, and never gave up despite all obstacles, setbacks and objections… and he got lucky on the timing… which goes to show what a hard head and a little luck can do.
“A few weeks ago there was a blurb about him saying he recommended shorting the dollar and buying gold. If he’s “sharing his insights”, it’s almost guaranteed he’s moving the opposite way.”
Exactly.
(did hell just freeze over? I actually agree with something you said!)
Yeah, here’s a guy that had picked the worst of the worst mortgages to put in to CDO’s got them rated AAA and sold to the investment community, all the while buying credit default swaps so when the thing went down, he pockets a big payday, and the poor sucker on the other side gets hammered. Now he’s saying to JsP, “come on in, take that money out of that Money Market fund and put it in the markets”. You can bet he has a short play set to trap the unwary when the pot gets big enough.
These guys never get enough. If I earned 2.7 Billion, I would have the nicest villa in Costa Rica and not spend one more second scheming about how to get the next billion.
No kidding. That’s the part I don’t understand. Well, actually I do… it’s called “megalomania.”
Thousands Sterilized In China Population Crackdown ~ Asianews
Thousands of people in one county of southern China have been sterilized in just days as part of a crackdown on violations of the country’s controversial one-child policy.
A 20-day campaign was begun on 7 April to sterilize 9,559 adults in Puning county, which with a population of 2.24 million is the most populous area of Guangdong Province. On 12 April local officials said they had already achieved about half their goal.
Doctors have been working 20 hour days to complete the massive round of surgeries. Local officials are so determined to reach their target they have been detaining relatives of those who resist the operation, potentially in violation of Chinese law.
Some 1,300 people are being held in cramped conditions around the county and forced to listen to lectures about the one-child policy while their relatives refuse to submit to the surgery.
one child policy poster 600×450 Thousands Sterilized In China Population Crackdown picture
The brother of 38-year-old Zhang Lizhao, who is the father of two young sons, was detained while Zhang was out of town buying supplies for his wholesale fruit business. Zhang rushed home to get sterilized – after his wife was already forced to have the same operation – so that his brother would be released.
“This morning my wife called me and said they were forcing her to be sterilised today,” Zhang said. “She pleaded with the clinic to wait because she has her period. But they would not wait a single day. I called and begged them but they said no. So I have rushed back. I am satisfied because I have two sons.”
..”I am satisfied because I have two sons.”
.. hey Zhang.. It’s almost amazing you people put up with that.
You got all the tea in China, and having a tea party has yet to cross your itty bitty..
I think it did a few years back.
Seems the government is pretty serious over there.
They ran people over with tanks.
I wonder if the mindless corporate drones still think it’s going to be a safe place to put your capital investment?
I wonder if Obama is going to get all upitty and say something to our favorite trade partner.
Wonder if this will be on CNN?
You noticed that one tank pilot in Tiananmen Square wouldn’t run over the guy waving the flag.. Tried to go around him.. which shows there is some sympathy in the military ranks.
It doesn’t take much to start a revolution but you gotta have the military on your side to finish one. A few upper echelon military leaders and a couple key assassinations is often enough for a successful coup.
having a tea party has yet to cross your itty bitty..
Unfortunately their tea parties end with bullets and tanks. Ben would probably be in jail right now signing an apology for contradicting the minister of information. The rest of us might be there too. Read up on Tibet and Tienemen to see how Chinese handle dissent.
Can’t type anymore now, I have to go to Walmart.
“Give me liberty or give me death.. ”
Not your cuppa tea, eh measton?
NO it’s my cup of tea. I’m just saying it isn’t everyones. I’d say when push comes to shove that even here in the US of A it’s a minority. Massive inflation and massive unemployment are about the only thing I can see causing riots here in the US.
Our government forcing us to be spayed or neutered might also do it..
I am satisfied because I have two sons.
I’m sure he is. Maybe they can marry each other, since those sickos abort so many of their little girls.
NYC mayor defends Wall Street before Obama visit
Apr 21
NEW YORK (AP) - As Congress debates sweeping legislation aimed at guarding against another financial meltdown, Mayor Michael Bloomberg has become Wall Street’s spokesman and defender amid a chorus of populist voices.
With President Barack Obama set to visit New York to push for passing financial reform, the billionaire mayor, who got his start on Wall Street in the 1960s and is considered a national expert on financial matters, argues that too much regulation could endanger the economy as much as others say it would protect it.
“The bashing of Wall Street is something that should worry everybody,” Bloomberg declared last week.
The Republican-turned-independent mayor’s positions have made him a lone wolf among left-leaning officials in the city. Local lawmakers and others rallied at City Hall on Tuesday in support of financial reform, some holding signs that read “Goldman Suchs.”
Bloomberg plans to attend Obama’s speech at The Cooper Union college Thursday but demurred when asked whether he was concerned about what the president would say.
“He hasn’t run his speech by me yet,” Bloomberg quipped Tuesday.
“The bashing of Wall Street is something that should worry everybody,”
How about systemic theft? Is anyone on Wall Street or in Washington worrying about that practice?
He’s got some gall, doesn’t he?
Another one to add to the worry list for the worriers.
Intelligence Agencies Warn: Burma May Be a Budding Rogue Nuclear State
Burma’s military junta could change power dynamics in Southeast Asia through its acquisition of nuclear weapons.
For the past year, intelligence agencies in the U.S. and Asia have been watching as equipment and machines capable of being used to build nuclear weapons have been flowing into Burma, raising the specter that the isolated and secretive Southeast Asian nation may become the world’s second rogue nuclear power.
Because of the nature of Burma’s paranoid and repressive ruling military junta, there is tremendous fear that, if it acquires a nuclear capability, it will set off an arms race that could change the political dynamics of Southeast Asia.
But experts caution that Burma, also called Myanmar, is so closed to the outside world that it is hard to be sure exactly what it is up to – and that makes the situation even worse.
OPLAN for tin-pot dictators:
-Make it look like you are building nukes. Buy a few pieces of high-tech equipment for no apparant reason.
-Let the intelligence guys sprung-loaded to the “worst-case-scenario” position loudly announce that you may be building nukes/WMD. Deny it loudly.
-Hide the equipment in a mine. Put up a tall fence. Put a few draftees around it, with guns. Throw a few journalists in jail for no apparant reason.
-Ignore all inquiries. Loudly deny doing anything.
-Wait for someone to come along, and start throwing money at you to abandon your program. Take the money, pull the guards and shut the doors, but don’t allow “verification”.
-When short of cash, open the doors and pot the guards again.
-Lather, rinse, repeat.
Maybe we can try the same thing out here in Flyover, Country
or.. they could build a nuke and threaten to blow themselves to smithereens, while holding themselves for ransom.
Then it’s either pay up or suffer the consequences.
But experts caution that Burma, also called Myanmar, is so closed to the outside world that it is hard to be sure exactly what it is up to – and that makes the situation even worse.
Myanmar scares me more than Burma.
Burma Shave.
I guess Americans have seen the last of the banking system bailouts, as politicians of all stripes are now adamantly opposed to the practice.
I suppose a true test of sincerity would be to see which party first proposes breaking up Wall Street Megabanks into non-systemically-risky pieces? When push comes to shove and Megabanks blow up, bailouts will happen, no matter what these guys promise today. Meanwhile, implicit free bailout insurance will continue allowing TBTF banks to profit from “heads-we-win, tails-taxpayers-are-screwed” high risk gambling strategies.
Dems, GOP compete for title of bank bailout foe
By DAVID ESPO
The Associated Press
Wednesday, April 21, 2010; 6:38 PM
WASHINGTON — If there’s any election-year support in the Senate for future bailouts of the big banks on Wall Street, it isn’t immediately apparent.
Instead, President Barack Obama and his Democratic allies compete daily with Republicans for the title of opponent in chief, and six months before midterm elections the fate of legislation to regulate the financial industry remains clouded.
…
I’m willing to be that when these TBTF banks blow up again, we will be required to open up our wallets again. I don’t think it matters if these crooks have a bankruptcy law foisted on them or not.
We will be on the hook for it. There will be no law that is truly big enough.
Roidy
Then I assume that we’ll be getting out of the IMF soon, being that we were just “volunteered” by them for $100B of new funds explicitly for that purpose?
Or maybe is this posturing - once again - just lip service?
VAT tax
Is this just a way to stimulate spending in the short run. This creates the perception of inflation right. Say they add 1% a year people might start spending their money to get ahead of it.
I am not the only one regularly suggesting that the TBTF banks need to be made small enough to the threat they pose to the global financial system, not to mention to taxpayers in sovereign states like the U.S.A.
Wednesday, April 21, 2010
Senate’s regulation bill omits 3 reforms
Robert Reich
The Senate is expected to start a floor debate on financial reform soon. Commentator Robert Reich says the bill under consideration is a good start, but lacks some important reforms.
Robert Reich (Robert Reich)
More on Commentaries, Commentary - Robert Reich, Robert Reich
Kai Ryssdal: I know we said this often during the health care debate. And it turned out often not to be true. But it does kind of feel like things are reaching a turning point in Congress. Over financial reform this time. Senate Banking Committee Chairman Christopher Dodd says he is looking to start a floor debate on reform tomorrow.
Commentator Robert Reich says the bill that’s under consideration is a good start.
ROBERT REICH: The real scandal isn’t the Street’s unlawful acts, such as Goldman Sachs’s alleged fraud, but legal acts that have reaped the Street a bonanza and nearly sunk the rest of us.
The bill now being considered in the Senate is a step in the right direction. But it omits three of the most important reforms.
First, it should require that all derivatives, that is bets on future asset prices, be traded on open exchanges where parties have to disclose what they’re buying and selling and have enough capital to pay up if their bets go wrong. The exception in the current bill for so-called “customized” derivatives opens a loophole big enough for bankers to drive their Ferrari’s through.
Second, the bill should resurrect the Glass-Steagall Act in its entirety so commercial banks are separated from investment banks. The current bill doesn’t go nearly far enough. Commercial banks shouldn’t be investing in the stock market, and investment banks shouldn’t be taking in deposits. We learned this after the Great Crash of 1929, and then forgot it in 1999 when Glass-Steagall was repealed because Wall Street wanted to create financial supermarkets.
Third, the bill should cap the size of big banks at no more than $100 billion in assets. The current bill doesn’t limit the size of banks at all. It creates a process for winding down the operations of a bank that gets into trouble. But if several big banks are threatened, as they were when the housing bubble burst, they’d almost certainly be bailed out. And knowing this they’ll take bigger risks than they should. The only way to ensure no bank is too big to fail is to make sure no bank is too big, period.
Wall Street doesn’t want these reforms because they’d cut deeply into profits, and is using its formidable lobbying clout with both parties to prevent even a decent discussion of them. It’s time for Main Street — Tea Partiers, coffee partiers, and beer drinkers — to be heard.
RYSSDAL: Robert Reich is a professor of public policy at the University of California, Berkeley.
How does the U.S. manage to keep its interest rates so low when the Greeks bond spreads are spinning out of control? Are we really that different than they are with respect to fiscal responsibility?
IMF and Bundesbank fear contagion from Greece as bond spreads soar to fresh records
The International Monetary Fund has warned that Greece’s debt crisis risks spinning out of control, threatening to spill over across the region unless action is taken soon to restore confidence.
By Ambrose Evans-Pritchard, International Business Editor
Published: 7:00PM BST 21 Apr 2010
Greek dockworkers went on strike on Wednesday, a precursor to broader stoppages by public sector workers in hospitals, schools, and ministries Photo: AFP/Getty Images
“In the near term, the main risk is that – if left unchecked – market concerns about sovereign liquidity and solvency in Greece could turn into a full-blown sovereign debt crisis, leading to some contagion,” said the Fund in its World Economic Outlook.
Bundesbank chief Axel Weber echoed the concerns, saying the financial system was still very fragile and subject to a “significant risk of contagion effects. A possible default by Greece would most likely be a severe economic blow for other countries in monetary union”.
Debt markets are already under severe stress. Spreads on 10-year Greek bonds jumped on Wednesday to a post-EMU high of 529 basis points above German Bunds, pushing borrowing costs to over 8.3pc. The Greek daily Kathimerini said the government was out of its depth and appeared to be in a state of “nervous exhaustion”.
The new twist on Wednesday was a sharp rise in default insurance on Club Med and Irish debt. Five-year credit default swaps (CDS) for Portugal rose 36 basis points to 235. Spain’s CDS rose to 17 to 162. Both countries are now nearing the all-time highs at the peak of last year’s credit crisis.
Greece’s bond market is effectively frozen, so spreads are almost meaningless. “It is a very thin market. Investors are keeping their powder dry,” said Chris Pryce from Fitch Ratings.
Marco Annunziata, Europe economist at Unicredit, said Greece must bite the bullet and activate the joint EU-IMF rescue plan, warning that time is running out with an €8bn refinancing crunch looming on May 19. “Action needs to be taken quickly. Investors want to make sure that the aid plan is no bluff,” he said.
“The external image of EMU has been seriously damaged during this crisis. The fact that a eurozone country has been forced to seek IMF assistance has not only underscored how the eurozone has been impacted more harshly by the crisis than the US, but also that the ties binding the area together are perhaps looser than previously thought,” he said.
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* Greece begins aid talks with EU, IMF
* Sovereign debt ‘the top threat to world economy’
* Greek financial crisis: the latest
* Germany warns of ‘Lehman’ crisis if Greece defaults
* Must Germany bail out Portugal too?
* Greece, Dred Scott, and the American Civil War
Sound money and economic freedom go hand in hand, while monetary disorder can rob a government of its authority.
Are the guys running the Fed’s printing press paying attention?
Greece, Dred Scott, and the American Civil War
By Ambrose Evans-Pritchard Economics Last updated: April 15th, 2010
84 Comments Comment on this article
Dred Scott’s case was a significant staging post on the path to civil war in the US
Dred Scott’s case was a significant staging post on the path to civil war in the US
Never underestimate the impact of supreme court rulings. The plan by a quartet of German professors to freeze the EU bail-out for Greece and block the European Central Bank’s back-door rescue through lax lending has epochal implications.
As I reported in this morning’s story after talking to two of the four, Wilhelm Hankel and Karl Albrecht Schachtschneider, the complaint is primed and ready to go to the Verfassungsgericht (constitutional court) in Karlsrühe days after the rescue mechanism is activated.
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I do not wish to suggest that the judges of the Verfassungsgericht are men of Taney’s stripe. Far from it. They have proved to be the only real defence of liberties in Europe, playing the role that the European Court of Justice has betrayed — becoming the instrument of civil rights abuse instead (See Connolly, Andreasen, and Tillack), for which they have never been held to account by the respective sovereign democracies. The Verfassungsgericht is the only effective court of appeal against EU aggrandizement.
Nor do I wish to suggest that Europe will descend into civil war. That is obviously not the issue here, though political conflict of some ferocity is on the cards.
My point is that this court challenge over the Greece may bring long-bubbling, long-suppressed tensions into the open.
It clearly poses risks that the media, markets, and South Europeans have failed to understand. Most appear to think that Chancellor Angela Merkel is being truculent because of the North Rhine-Westphalia elections on May 9. This presumption reveals more about them, and the legal-political cultures they come from, than it does about German affairs.
The German passion for sound money is not just the result of hyper-inflation in 1947-1948 and 1923. It stems from the deeper intuition that sound money and democratic freedom are inter-linked. Monetary disorder bled Weimar of legitimacy.
Of course, this complaint threatens to unleash havoc in all kinds of ways. “This may cause a great crisis in Europe but we already have a crisis,” said Dr Karl Albrecht Schachtschneider, law professor at Nuremberg University and author of the complaint, when we chatted yesterday.
He will ask for an injunction to freeze all aid for Greece while the case is pending, which may take weeks or months.
How will the Court rule? The breach of the no bail-out clause of Article 125 of the Treaties is so clear that it will be very hard to finesse. “It is a question of law – the duty of the court to defend the German constitution. They have no choice other than reaching a lawful decision,” he said.
His fellow Musketeer, Professor Wilhem Hankel from Frankfurt University, is more sceptical, telling me that the Verfassungsgericht is a “political court” that will try to wriggle out of a hot issue. He said a clear ruling that prohibits the bail-out is “unlikely”, but the political fall-out will be great whatever happens.
There is a game of timing here. Will the quartet file the complaint immediately to freeze aid, or will it wait just long enough to allow the first tranche to reach Athens? If the professors wait, they may think they can strike a knock-out blow by arguing that Europe’s monetary union is damaging monetary stability and has therefore become an illegal undertaking in which Germany can no longer participate.
Much depends on this point, says Hans Redeker, currency chief at BNP Paribas. If the professors go for the jugular, they may force the Verfassungsgericht to pull the plug on the entire EMU Project.
“This court hearing is going to be very dangerous. It could lead to Germany itself being catapulted out of the currency union. Once investors begin to fear this, there will not be a single euro in further financing for the EMU periphery.”
He sees a 10pc chance that this ruling will lead to German exit from monetary union.
For the four professors, Hankel, Schachtschneider, Wilhelm Nölling from Hamburg Univerity, and Joachim Starbatty from Tübingen University, have been fighting their lonely crusade for a long time.
They battled the Lisbon Treaty and some battled the Maastricht Treaty as well. They did not succeed in blocking these transfers of power to Europe, but they did extract rulings that established limits to the erosion of German sovereignty and democracy.
Among them is the Maastricht decision of 1993 which said that a failure by EMU to ensure monetary stability would constitute a breach of the German Constitution. The Court kicked the issue into the future, and now the future has arrived. Will it be rope enough to hang the Project?
Why can’t Germany extract rents sufficient to cover the costs of bailing out both Greece and Portugal?
Must Germany bail out Portugal too?
Portugal, not Greece, poses the greater existential threat to Europe’s monetary union.
By Ambrose Evans-Pritchard
Published: 7:13PM BST 18 Apr 2010
Lesson learned by greatest fools who bought Gollum’s toxic mortgage investments: Making deals with the Devil can result in getting severely burned.
* BUSINESS
* APRIL 22, 2010
The Busted Homes Behind a Big Bet
By CARRICK MOLLENKAMP , MARK WHITEHOUSE And ANTON TROIANOVSKI
ABERDEEN TOWNSHIP, N.J.—The government’s civil-fraud allegation against Goldman Sachs Group Inc. centers on a deal the firm crafted so that hedge-fund king John Paulson could bet on a collapse in U.S. housing prices.
It was a dizzyingly complex transaction, involving 90 bonds and a 65-page deal sheet. But it all boiled down to whether people like Stella Onyeukwu, Gheorghe Bledea and Jack Booket could pay their mortgages.
They couldn’t, and Mr. Paulson made $1 billion as a result.
A $652,500 mortgage on this home in Middletown, N.J., was among the nearly 500,000 loans, spread across 48 states and the District of Columbia, on which investors in Abacus made their bets.
Mr. Booket, a 44-year-old heating and air-conditioning repairman, owed $300,000 on his three-bedroom home in Aberdeen Township. His house was one of thousands that wound up in a pool of mortgages that were referenced in the so-called collateralized debt obligation, or CDO, which Goldman created for Mr. Paulson. The hedge-fund manager invested heavily in a form of insurance that could yield huge gains if the borrowers grew unable to pay.
In 2006, Mr. Booket got hit by a car while riding a motorcycle from a late-night party, was unable to find much work and couldn’t pay the bank. In October 2008, he lost the house to foreclosure and plans to move out by next week. He says he bears no grudge against Mr. Paulson and Goldman.
“The man came up with a scheme to get rich, and he did it,” says Mr. Booket, who had refinanced his mortgage just months before the accident. “So more power to him.”
More than half of the 500,000 mortgages from 48 states contained in the Goldman deal—known as Abacus 2007-AC1—are now in default or foreclosed.
Mr. Paulson didn’t have any direct involvement in the mortgages contained in the Goldman deal under scrutiny by the Securities and Exchange Commission. And the bets that Mr. Paulson placed on Abacus didn’t affect whether or not homeowners defaulted. Rather, he used Wall Street to help structure hugely lucrative side bets that homeowners such as Mr. Booket couldn’t make their monthly mortgage payments.
One loser in the deal, German bank IKB Deutsche Industriebank AG, saw most of its $150 million Abacus investment evaporate. It had believed that borrowers broadly could afford the loans. The bank says it is cooperating with the SEC’s inquiry.
“There’s no question we made money in these transactions,” said a Paulson spokesman in a statement. “However, all our dealings were through arms-length transactions with experienced counterparties who had opposing views based on all available information at the time. We were straightforward in our dislike of these securities but the vast majority of people in the market thought we were dead wrong and openly and aggressively purchased the securities we were selling.”
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Flight to quality move from Euro to U.S. dollars noted.
Bloomberg
Treasury Yield Near Four-Week Low as Greek Concern Spurs Demand
April 22, 2010, 1:52 AM EDT
More From Businessweek
* The Home-Equity Hurt Ahead for Banks
* Goldman Sachs: Don’t Blame Us
* Goldman Sachs Said to Have Been Warned of SEC Suit (Update1)
By Yasuhiko Seki and Wes Goodman
April 22 (Bloomberg) — The Treasury 10-year yield was near the lowest level in four weeks as concern that Greece will need to tap emergency loans to avoid default boosted demand for the relative safety of U.S. government debt.
The difference between 2- and 10-year yields was close to a one-month low after Greece’s 10-year bonds slid for a seventh day, pushing yields on the securities to more than 5 percentage points above German bunds for the first time. U.S. notes rose yesterday on speculation the Treasury will start to cut the sizes of its auctions after next week’s sales.
“Concerns over sovereign problems in countries like Greece may discourage risk sentiment and curtail capital inflows into riskier assets,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd., a unit of Japan’s fourth-largest banking group. “The debt securities of developed nations may draw buying interest.”
The yield on the 10-year note rose one basis point to 3.74 percent at 6:44 a.m. in London, according to BGCantor Market Data. The 3.625 percent security due February 2020 fell 2/32, or 63 cents per $1,000 face amount, to 99 1/32. The yield earlier dropped to 3.73 percent, the lowest since March 24.
The spread between yields on 2- and 10-year debt shrank to 2.72 percentage points yesterday, also the lowest since March 24, before trading at 2.75 percentage points today. The so-called yield curve widened to a record 2.94 points Feb. 18.
Greece Concerns
The extra yield investors demand to hold Greek 10-year bonds instead of German bunds climbed to a record 522 basis points yesterday. The spread widened as the debt-laden country started talks on an assistance package including 30 billion euros ($40.2 billion) from the European Union and as much as 15 billion euros from the International Monetary Fund.
Finance Minister George Papaconstantinou said Greece may activate an emergency aid package led by the EU before the talks on the loan conditions end in two weeks.
“I’m not saying that the government will ask for it,” Papaconstantinou said in Athens after the first session of talks with officials from the euro region, the IMF and ECB.
“There is still a safety bid from Greece giving Treasuries a boost due to continued uncertainty and the selloff in Greek debt,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas, one of the 18 primary dealers obliged to bid at government debt sales.
The Treasury will next week sell an unprecedented $128 billion of two-, five- and seven-year notes and inflation- indexed securities maturing in five years, according to the average estimate of nine primary dealers in a Bloomberg survey.
Debt Issuance
The supply of Treasuries may fall by $52 billion for the rest of fiscal 2010 and drop by $589 billion in fiscal 2011, James Caron, head of U.S. interest-rate strategy at primary dealer Morgan Stanley in New York, wrote in a note to clients.
President Barack Obama has boosted marketable U.S. debt to a record $7.76 trillion, Treasury figures show. Obama’s proposed budget calls for a $1.6 trillion budget deficit in 2010, compared with last year’s record $1.4 trillion gap.
Demand for Treasuries was tempered before reports that economists said will confirm a recovery in the world’s largest economy, led by consumer and business demand.
Bookings for goods meant to last several years rose for a fourth month, according to a Bloomberg survey before the Commerce Department report tomorrow. Reports today and tomorrow will show existing-home sales and new-home sales gained in March, other surveys forecast.
Higher Yields
“Yields are going to rise,” said Hideo Shimomura, who helps oversee the equivalent of $53.8 billion in Tokyo as chief fund investor at Mitsubishi UFJ Asset Management Co., a unit of Japan’s biggest publicly traded bank. “Consumer demand and demand from businesses are going to pick up.” Shimomura said he may trim his bond holdings now 10-year yields have fallen a quarter of a percentage point from this month’s high of 4.01 percent set on April 5. That level was the most since October 2008.
Futures on the CME Group Inc. exchange show a 66 percent chance the Federal Reserve will raise its target rate for overnight bank lending by at least a quarter-percentage point by its December meeting, down from 78 percent odds a month ago. The Fed has kept the rate in a range of zero to 0.25 percent since December 2008.
The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices, stood at 2.35 percentage points today, compared to this year’s high of 2.49 points in January.
New Business April 14, 2010, 11:01PM EST text size: TT
The Home-Equity Hurt Ahead for Banks
Bad second mortgages are about to batter earnings and slow efforts to resolve the foreclosure crisis
By Dakin Campbell and David Henry
BW Magazine
Bank shareholders have reason to be pleased. On Apr. 14, JPMorgan Chase (JPM), the first major bank to report first-quarter earnings, beat analysts’ estimates with a 55% gain. The 24-company KBW Bank Index jumped 22% in the first three months of this year, more than four times the 4.9% gain of the Standard & Poor’s 500-stock index. Investors have pushed up the price of financial stocks in the belief that the biggest loan losses are in the past and banks will begin to restore dividend payments and buy back shares.
Their party may be premature. Banks are sitting on a problem that won’t show up in the current round of earnings reports but has the power to stall the bank rally and economic recovery as well: bad home-equity loans.
An analysis by CreditSights, a New York research firm, shows that the four biggest banks by assets—Bank of America (BAC), JPMorgan Chase, Citigroup (C), and Wells Fargo (WFC)—may need to set aside an extra $33.2 billion to cover additional losses on home-equity loans that could begin hitting their balance sheets later this year. That amount is almost equal to what analysts expect the four banks to earn in 2010.
The four companies hold $442 billion of the nation’s $1.1 trillion in second-lien mortgage loans, according to Amherst Securities Group, an Austin (Tex.) firm that analyzes home loans.
JPMorgan CEO Jamie Dimon told investors earlier in the year that his bank’s quarterly writedowns for home-equity lending this year “could reach $1.4 billion.” While the bank wrote down $1.1 billion of home-equity loans in the first quarter, in a conference call Dimon cited “uncertainty” about the rest of 2010.
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