Bits Bucket For May 22, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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This spring I went to some open houses and generally was more involved. I wanted to get a closer feel for what was going on, in the Long Island market. During April there was definitely a manic atmosphere. At open houses there were people that were quickly running in and out of the open houses. You could see that they were trying to beat the clock. Sellers were taking advantage with high asking prices. What surprised me was that after the end of April, the majority of the houses I followed are still on the market. Most the activity has been below $400,000. The total numbers of listings took a dip but the numbers have quickly rebounded and exceeded the spring numbers. The last couple of weeks I’ve noticed a lot of new listings in the high end of the market. The sold listings for the more expensive homes, $600,000 + , shows very little activity over the last 6 months. It appears that the pool of buyers that can realistically afford the high priced houses, has shrunk dramatically. We seem to be setting up for a correction in the higher priced properties. The next couple years should be interesting.
Yes, many of us have noted that most of the buying activity over the last year was in the 400k or less price range due to the tax credits and speculators, and that there was less of a discount in such price range. I’m seeing foreclosures in the 300’s come on the market now and sit for weeks. Only a couple sold since May 1st. They used to be gone in days. The numbers from this Summer should be interesting.
I’m watching coastal communities north of Santa Barbara, (Pismo, Morrow, San Luis, Paso Robles) and also San Clemente, Oceanside to Carlsbad/Vista/San Marcos amongst others.
Lots and lots of props that had been selling in the 6’s are now low 4’s and even 3’s.
OTOH, South Bay, Culver, SM WLA Del Mar etc.. don’t appear to be budging. Yet. At some point, the price contrast will become glaring and something will have to give.
I agree. I’m watching those areas too, that you are mentioning. Higher end home prices falling will also push lower end prices down.
+1 for watching WLA/SM. Would *love* to get a refurbished home in the Mar Vista area for 1997 pricing =).
To the best of our knowledge, my wife has escaped the massive round of layoffs at her employer for next year! So, we will continue along our merry way of amassing cash for the eventual crash and purchase. Was pretty worried and disappointed that we were going to tap the cash stack just to pay her bills.
Meanwhile your cache of cash losses a little more value with each trillion in helicopter money pumped into the system.
So let me ask you this- where is a safe haven to store wealth now?
There is no safe haven, only less risky havens.
I will say that we are getting closer and closer to the point where a fixed mortgage will be a really nice haven, assuming employment security.
I’m watching Glendale, Los Feliz and Hollywood areas. I’ve seen an increase in listings and watching to see how many of the April sales stick. If a good number fall out and if the seasonal increase in listings happens, there could be quite a glut by July.
Visited some open houses last Sunday. Visited one REO sale and was surprised by how grungy the place was. When asked by the agent what I thought, I said I thought perhaps they could clean the place up a bit.
The agent replied, “Well it is an REO”. Guess they still think they don’t have to do anything to earn that commission check.
I toured two new-to-market REOs last week. I wondered why the banks didn’t put them on the market a few weeks earlier in hopes of snagging a tax credit-driven buyer. The agent told me that their office did NOT see a surge of buyers rush in to take advantage of the tax credit. This is the ‘burbs, so maybe the city got the lions share of tax credit knifecatchers.
Those higher end prices coming down will push the lower-priced housed down. One would expect the higher priced ones are in better neighborhoods with better schools and jobs, so sellers of $400,000 homes and less will have to price them lower to keep attracting buyers.
2012 is only about a year and seven months away. I’m reassessing my remarks about three or four years ago on this blog that the RE bottom will be 2012. I think the bottom could be 2013 or 2014. That would make buying gold, reinvesting in T-bills, savings bonds, and renting small apartments much smarter than being a mortgage slave.
Good street report Vmaxer. Thank you.
Manufacturing accounts for 23% of April mass layoffs ~ RP news wires
Employers took 1,856 mass layoff actions in April that resulted in the separation of 200,870 workers, seasonally adjusted, as measured by new filings for unemployment insurance benefits during the month, the U.S. Department of Labor’s Bureau of Labor Statistics reported on May 21. Each action involved at least 50 persons from a single employer. The number of mass layoff events in April increased by 228 from the prior month, and the number of associated initial claims increased by 50,006. In April, 448 mass layoff events were reported in the manufacturing sector, seasonally adjusted, resulting in 63,616 initial claims.
During the 29 months from December 2007 through April 2010, the total number of mass layoff events (seasonally adjusted) was 58,793, and the associated number of initial claims was 5,932,553. (December 2007 was the start of a recession as designated by the National Bureau of Economic Research.)
“Manufacturing accounts for 23% of April mass layoffs.”
Only 23%? I’m surprised. So that means 77% of mass layoffs are from jobs other than manufacturing?
But then manufacturing jobs have already been gutted from the American scene over the past decade or so which means there is not much of a manufacturing job base left to cut.
Comments?
As energy gets more expensive, those manufacturing jobs will be coming back. Outsourcing, at least for manufacturing, is one of those “global” fads that won’t last.
With all the talk of cheap labor, it’s a bit of a surprise there isn’t more manufacturing being outsourced to Mexico. Not for lack of trying, though. I’ve read anecdotes here and there about how difficult it is. Bribes, disruptions, etc. Not to mention, the difficulty of the foreign managers with their “papers”. The government is far less stable than China’s.
And, is the quality up to Chinese standards?
See my post below, which was meant to be a response to Combo but showed up as a new thread. How much a premium do you think the World puts on American quality? I’m guessing that for most things it doesnt pencil out to the degree necessary to support currrent asset valuations based on realistic cash flows as opposed to mark-to-fantasy market. If we are going to compete in manufacturing, we need to be cost-efficient and have exceptional quality. I’m for American jobs, but we need to be realistic. I could write a book on Unions and other related matters, so I will not bore you or blow Ben’s capacity constraints.
“How much a premium do you think the World puts on American quality? ”
Not much. A friend built a home in Mexico and was cautioned about bringing in quality
items. For example, his pump for his well was made in MX; cheap, crude, but easily
rebuilt vs the US made pump, expensive,
precision built, and a throw away when
failed.
Also, I used to work for a textile and apparel supplier who tried to do manufacturing in Mexico, but stopped due to quality control problems. Apparel companies are very fickle, and shift suppliers all the time, chasing the saving of a penny or a country with different quotas, etc.
A couple of years ago, when gas prices were at a the high, a friend in the textile biz told me one of his suppliers had reopened some manufacturing capacity in the American south because increased shipping costs made it (briefly) competitive to manufacture there. (This would be for higher end interior design fabrics, not commodity goods.)
Also the amount of time needed for ocean transport adds a lot of time to a manufacturing calendar. (Air shipping really adds cost and is avoided whenever possible.)
Somebody smart could probably figure out how to make “quality” stuff closer to home.
Maybe the only good thing to come out of a dollar crash will be that our exports are more attractive.
IIRC manufacturing was outsourced to Mexico back in the 1980’s. But then that only lasted a decade or so and those outsourced jobs in the maquiladoras became “ricochet shots” and ended up being outsourced from Mexico to Asia.
Polaris is closing shop, moving to MX.
Next stop: Asia.
Polaris is moving some manufacturing to Mexico initially. I have no doubt that most if not all of their manufacturing will land there eventually. I sno-checked a 2011 Pro-RMK and am seriously reconsidering the purchase.
Before the burst, roughly only 10-15% of US jobs were in manufacturing. For those that demand cites, google “percentage of American jobs manufacturing.” Manufacturing jobs supposedly accounted for 23% of the layoffs in April. Thus, if true, manufacturing was losing jobs at above twice the rate of the “other” category. Doesn’t sound insignificant to me. That is why the Financial Reform Act scares me so much. To the extent we limit profit in financial services, and, thus give other countries the competitive advantage in such sector as well, where are we going to get the cash flow to support current valuations? The only thing we could compete on is becoming the low cost provider by cutting salaries dramatically. Sure we can lead try to lead in innovation, but with manufacturing offshore, less than 10% of the population has such skills. Do we really want to try to undercut China for cheap labor? That is where we are headed if we want to be able to eat. Sure that golden eggs that chicken laid were spray painted gold, but at least we had eggs once.
Doesn’t sound insignificant to me ??
I agree…Wander through some of the heavy manufacturing areas particularly in the Central Valley of California and they look like Detroit…
Thought provoking post Natalie…
Outsourcing and out-manufacturing has been a horrible thing for America .This notion that we outsource our job base to low wage Countries and than say we than have to compete with
low wage Countries is a con job by the Industries that gain by
such a system . Here in America we didn’t protect our borders and we didn’t protect our job base /tax base. People think that they can live in a glass bubble aside from what the general population is
going through ,but just look at how many new graduates can’t get employment that comes close to what they should of .
If I was King, first I would put a penalty tax on any American Monopolies that out source jobs to compensate for the loss of money spent in America and loss of tax revenue . Second , I would put a steep penalty on any manufacturing products brought back here by American Companies and put steep
import taxes on those products to discourage manufacturing outside our shores .
A country who has a economy based on Wall Street treating the World like it is their oyster at the expense of the general welfare of huge population sectors that will be hurt
is the dream of the greed machine . I hope the sectors that are hurt burn down those marbled mansions if this continues .A country can’t live on being a speculation society in stocks ,or homes ,or money changing by fake leverage or Ponzi -scheme leverage . Cheaters like to take advantage of different rules in different places and they think they can take the money and run .
“A country can’t live on being a speculation society in stocks ,or homes ,or money changing by fake leverage or Ponzi -scheme leverage”
Bravo HW!
“TrueFinancialCult™”/“TrueSerialLiquiditist™”/ “TruePatriotCEO™”
Housing Wizard = “TruthSlayer™”
Maybe when average houses sell for $20,000, brand new houses sell for $28,000, and high end houses sell for $100,000 (Malibu, Montecito, Santa Barbara), salaries of $35,000 per year won’t really seem so bad. And then we achieve parity with India and China.
And then manufacturing jobs come back to the U.S. because it would not be cost effective to outsource!
Fall, real estate prices, Fall!
Has a house in Malibu sold for $100K in the past 50 years? I’m all for falling prices, but I am also realistic.
$300,000 was common in Pacific Palisades in the mid- to late-nineties.
“Executive” homes in Fresno’s northwest side were selling for $44,000 in the early 70s. They are about $400,000 to $500,000 now. That would probably be equivalent to $1,000,000. There are places along the LA waterfront that are selling for $1,000,000.
I just checked Malibu and I was way off the mark. Okay. Hermosa Beach has some ocean view places for under $1,000,000 now that were probably at under $100,000 in the early 1970s.
I have friends bought a 2 bedroom two bath doorman coop on central park west for $180,000 about 15 years ago.
Same floor plan on higher floor has sold for almost a million at peak.
Uh Natalie, the FIRE sector destroyed itself and nearly took down the rest of the world with it (and contrary to popular belief, it ain’t over yet) and you say it shouldn’t be reigned in?
Really.
No.
Really.
That isn’t what I am saying it all. I’m saying we need to target bubbles and abuse, not make a mess. Have you read the Act and are you familiar with how it will impact the markets? I am all too familiar with it. I dont understand the, “this or nothing,” or “you are with me or you are against me,” logic. Regulation is needed, bad regulation is not. They haven’t even fired the old regulators yet.
Natalie,
I agree. The bill is a progressive’s wet dream. It punished commerce and gives free stuff away to “victims” of free markets.
And never mind the fact that when costs for banks go up, costs for bank customers also go up. All we need to know is that the bill punishes all those greedy bankers who according to Obama make “too much”. So all is well.
Anytime you try to correct something that was extremely corrupt and rigged you will get a fight because of the pain it will
cause people who have become dependent on stacked decks and rigged ponzi-schemes .
Currently IMHO ,the new reform is to watered down and to many tricks in it . You really can’t depend on regulators anyway and so you need to just have strong laws against the games to begin with .
I like you Ki. I don’t always agree with you, but I always respect your opinion. You have an intelligent, blunt, no nonsense attitude.
I repeat, the FIRE destroyed itself (and not for the first time in the history of this nation) and you are say there is such a thing as BAD regulation?
Tough. Too damn bad. This is what happens when you abuse your privileges. They get taken away. They should have thought of this before they brought the world almost to the brink of WW3. (and that is still yet a possibility)
Go ahead. Raise the costs. Many an industry thought they could hold their customers hostage and found out different.
I agree ecofeco . A industry that always blackmails that it will raise costs if you don’t give them their stacked decks is bogus
and no better than criminals thinking they don’t have to give value for the dollar that they have gotten away with for to long now . Are they going to get the Government to force people to deal with them
if they price themselves out of the market ,like they did with Health care ?
Nobody said it was going to be easy to change financial markets back to something sane after the beast was let out of the box.
The simple truth about illegal immigration
“The only way to permanently solve that problem is to permanently end the welfare state. Turn off the spigot and they’ll stop coming here for free drinks.”
http://orangepunch.freedomblogging.com/2010/05/20/the-simple-truth-about-illegal-immigration/26465/
IMO the spigots going to be shut off one way or the other. Will illegal immigration continue? I think they come for a better life and not just the free stuff, but the free stuff sure acts as an incentive.
Local housing recovery expected to slow here in San Diego. (I, personally am recovering from doing research last night…researching my liver’s ability to absorb alcohol)
By Roger Showley, UNION-TRIBUNE STAFF WRITER
Friday, May 21, 2010 at 9:22 p.m.
San Diego County home prices, which began to recover last year, will continue rising but at a slowing pace as government stimulus programs expire, Beacon Economics forecasters predicted Friday.
In a wide-ranging review of the local economy at the San Diego Hilton Torrey Pines, the San Rafael consulting firm’s economists said single-family resale home prices will trend upward, from the first quarter’s median of $382,788 to $439,000 over the next four years — a nearly 15 percent rise.
“Home prices in San Diego are great news here,” said Brad Kemp, Beacon’s director of regional research.
http://twurl.nl/6ktte7
I’m too broke to even thinking of buying a home in s. california.The prices are still ridiculous to me.I might be able to afford a shack in compton somewhere.Thats where they give you a tommy gun as part of escrow.
az dude-
So Ca housing prices are still ridiculous, to anyone who isn’t wealthy,gullible, or can do some math and research. We’re in the market to buy, actively looking.One average ranch/ 1,800 sq ft/ sm pool, was $500K and it sold in the high $200K’s in 2002. It looked like an REO that was contracted out to an Asset Mgmt firm to hide the fact. Needed some “TLC” (Used home lingo for black hole checkbook).
That house to us, buyers/cash, high $3’s.
reconsidered, $350Kish. Needs TLC aka deferred maintenance.
“tommy gun as part of escrow”
AD, that’s funny!
Recovering?
*cough cough*
I’m having fun watching Vista/San Marcos and even precious Carlsbad revert back to 2003 levels.
I suppose you can call that a recovery of sorts.
thumbs up!
Shouldn’t San Marcos be a little more stable near the new college?
‘In a wide-ranging review of the local economy at the San Diego Hilton Torrey Pines, the San Rafael consulting firm’s economists said single-family resale home prices will trend upward, from the first quarter’s median of $382,788 to $439,000 over the next four years — a nearly 15 percent rise.
“Home prices in San Diego are great news here,” said Brad Kemp, Beacon’s director of regional research.’
Thornberg is a housing price cheerleader, too, now? I will take that as a contrarian signal that a second leg of the housing crash is imminent.
I think maybe Thornberg got taken by a pod.
Kevin Costner may save the Gulf.
http://articles.latimes.com/2010/may/21/nation/la-na-oil-spill-hollywood-20100521
As an aside, has anyone noticed that these corporate behemoths like BP are really short on technology to handle screw-ups? We have regular Joes like the engineer from Zephyrhills, Florida submitting workable suggestions and then Hollywood stars like Costner. Creativity is what you need when there’s a problem, but creativity is in short supply in the corporate world.
Unless, of course, you’re “creating” crappy financial products on Wall Street. No end of creativity there.
Don’ tell that to some people. They think Wall St. hung the moon.
Hey, what happened to “Fat Finger Friday”? Looks like they fat-fingered the Dow up.
Seems like the shorts got a little nervous for some reason.Wasnt there a rumor about a settlement with goldman and sec floating around?
Yep, and it was a falsie.
That was a pretty cheap card trick by the FED if you ask me. I was anticipating a .gov rally all day.
The subject incident actually occurred Thursday, May 6th. What was interesting is that markets dropped to almost exactly the same level as the weighted bottom of what they are now calling the “flash crash” before bouncing up. I believe the flash crash was really triggered by computer generated trading programs tied to currencies and various sell triggers linked to complex algorithms that all hit their triggers in a 30 minute period. There is some temporary support at this point. It is great for funds to have their programs work automatically so they can take Fridays off to yacht, but when they all hit at the same time, bad stuff happens.
Before the burst, roughly only 10-15% of US jobs were in manufacturing. For those that demand cites, google “percentage of American jobs manufacturing.” Manufacturing jobs supposedly accounted for 23% of the layoffs in April. Thus, if true, manufacturing was losing jobs at above twice the rate of the “other” category. Doesn’t sound insignificant to me. That is why the Financial Reform Act scares me so much. To the extent we limit profit in financial services, and, thus give other countries the competitive advantage in such sector as well, where are we going to get the cash flow to support current valuations? The only thing we could compete on is becoming the low cost provider by cutting salaries dramatically. Sure we can lead try to lead in innovation, but with manufacturing offshore, less than 10% of the population has such skills. Do we really want to try to undercut China for cheap labor? That is where we are headed if we want to be able to eat. Sure that golden eggs that chicken laid were spray painted gold, but at least we had eggs once.
This was in response to Combo’s post above, my responses are being posted as new threads for some reason.
“To the extent we limit profit in financial services, and thus give other countries the competive advantage is such sector as well, where are we going to get the cash flow to support current valuations?”
“Financial services”, now there’s an abstract term. It seems to me financial services should be a by-product of something more concrete, such as a manufacturing base.
Loaning and borrowing and creating derivitives and such on what is loaned and borrowed doesn’t really create wealth, it just distributes the wealth that is created from actually producing things.
I do not agree 100%. Derivatives were originally created to hedge risk and take advantage of changing market conditions by doing such benefical things as keeping the all-in interest rate on your debt as low as possible at all times. There is a huge distinction between those products that reduce risk (such as an interest rate hedge that synthetically fixes your floating rate exposure, and CDSs which may work to increase your exposure), yet the Financial Reform Act thows a confused blanket on them all. I agree we are not where we should be as far as a jobs mix, but we cannot go back to where we should be without major asset devaluation. America could in fact be a first class leader if we kept the majority of brain trusts and debt servicing here, and outsourced menial tasks. To do so, however, we have to keep it corporations’ best interests to do so. We can also go back to self sufficiency, but if we do, we can’t pretend that we can keep these valuations and there will be much short term pain.
“Derivatives were originally created to hedge risk and take advantage of changing market conditions by doing such benificial things as keeping the all-in interest rate on you debt as low as possible at all times.”
Whatever derivatives were originally created for pales in import as compared to what they have become.
The point I am trying to make is the financial part of a physical transaction - the delivery of a good or service - used to be a result of the physical part of a transaction, not the primary part of the transaction. Nowdays the financial part of a transaction is too often the entire transaction in itself; There is no physical part of the transaction in that there is no delivery of a good or service at all.
True many transactions were secondary transactions, such as debt securitizations. Such securitizations created many high paying jobs. If we make secondary transactions less attractive to be done in US (even those that were not based on faulty modeling or fraud), it would be a huge blow to our economy. What is going to fill the gap in high paying jobs in the US. More government jobs under all these Acts that are being passed without much thought? Makes me think of the movie Escape From New York.
“Such debt securitzations created many high paying jobs …”
But the payroll for these high paying jobs has to come from somewhere. It used to be the money came from production; Now the money comes from finance.
Production has a sold base. Finance ultimately is backed by thin air.
“But the payroll for these high paying jobs has to come from somewhere.” True, but a lot of it came from being the world center for debt securitizations, which in turn created securities that were also in many cases sold globally. Thus, it was not just siphoning money out of the US but was in part pulled out of gains realized from world wide debt restructuring to create certain efficiences. Yes, people could go on and on about fraud and bad modeling, but the industry would be and is still an important growth industry without such factors. One that we may lose for good or bad, but not without consequences. I just ask that we stop to think if we are throwing the baby out with the bath water.
“What is going to fill the gap in high paying jobs in the US.”
Big Finance was and still is in a bubble not unlike the Housing bubble. When a bubble bursts job losses are the natural consequence. Does it really make sense to build more houses or securitize more dodgy assets after a bubble bursts?
“True, but a lot of it came from being the world center for debt securitizations, which in turn created securities that were also in many case sold globally.”
Debt securitizations, securities … - is there anything real in any of this? It seems to have the poofeness qof thin air.
Ooops,
“qof thin air” = quaility of thin air”
a return to the good ole days of the FIRE economy is just as remote as a significant resurgence in the American manufacturing base IMHO.
the end of cheap oil would help to some extent though.
I would say that the “Financial Services” industry has become primarily parasitic.
“the “Financial Services” industry has become primarily parasitic.”
It’s one thing to short the masses via the housing bubble implosion. It’s another to pay yourselves hefty bonuses after begging for an industry wide bailout using the government’s balance sheet. It’s completely moronic to then turnaround and short the very sovereigns that just bailed you out. Sovereigns have the ability to regulate you to death.
“Production has a sold base. Finance ultimately is backed by thin air.”
Well money doesn`t grow on trees, it comes from thin air.
Bernanke Admits Printing $1.3 Trillion Out Of Thin Air
21 April 2010
By Greg Hunter
USAWatchdog.com
Fed Chairman Ben Bernanke admitted the central bank created $1.3 trillion out of thin air to buy mortgage backed securities. This shocking admission came from the Joint Economic Committee hearing on Capital Hill last week. I was dumbfounded when I saw Bernanke shake his head in the affirmative as Representative Ron Paul said, “Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system.” I was amazed he admitted this. I looked up the original hearing on C-Span to make sure the clip was not edited. It was not.
Of course the high paying jobs of the financial sector are parasitic and any attempts to keep that status quo is absurd and are the ramblings of shills from that rigged industry that bribes and pushes faulty PR to get their unfair advantages .
Anybody who endorses the money games of Wall Street Money Changers and middle men are into schemes that fleece the wrong side of the trade . Companies placing Credit Default Swaps on securities that they helped arranged to begin with reeks of insider trading anyway ,but they like to say they were just hedging their bets .
If you give the Wall Street Middlemen free rein in their unregulated markets to create any casino game they want your are only going to get a gambling mark at the wrong side of the trade who has the nerve to gamble with other peoples money .
Look at the AIG “Mark ” (I understand it was just one guy )n that Department that gambled on all those Credit Default
Swaps without reserves . This is gambling without money to back it just like any high leverage game is .
Look at how all the borrowers of residential real estate were buying real estate they couldn’t afford betting on real estate going up to pay the bill (and Wall Street Lenders let them ) .Wall Streets Financial sectors basic nature was translated to Main Street and if you were on the wrong side of the trade you created a foreclosure for the government to mop up .
People love to cheat by having get rich quick schemes that some fool will lose a fortune . Add to that that value is pumped up and so disconnected from true value to begin with and you got the current way the Financial sectors likes to make ill-gotten gain . Who cares if those high paying jobs are kept or not and if anybody cares it must be because they have one of those high paying devil jobs .
People who endorse the Wall Street money gamblers doing these games but look down on the average borrower that had the nerve to play these games are just people that are just not sound in their logic ,and they just like get rich quick schemes in the final analysis . Let the Financial Sectors earn money the good old fashion way .
but the industry would be and is still an important growth industry without such factors. One that we may lose for good or bad, but not without consequences.
Classic! After the financial industry has helped offshore a gazillion jobs in every other sector, suddenly it’s bad for America if we offshore financial ‘jobs’. And they dare to trot out the same arguments they scoffed at when other industries made them. Apparently what’s good for the goose ain’t so good for the gander.
Good riddance to the lot of them, if only we’d be so lucky as to run them all off. I only pity the countries where they end up- and I’ll be sure to short their currencies- I’ve seen how their ‘product’ works.
BINGO
It would be easy to restrict those off shore markets from the US if we had an effective, not bought and paid for gov.
“Classic! After the financial industry has helped offshore a gazillion jobs in every other sector, suddenly it’s bad for America if we offshore financial ‘jobs’. And they dare to trot out the same arguments they scoffed at when other industries made them. Apparently what’s good for the goose ain’t so good for the gander.”
So when unions destroy US manufacturing competiveness we send the jobs off-shore; when Wall Street runs unregulated we send financial jobs off-shore (via taxes, charges, fees, unproductive regulation), etc. Where does it end, until we are left with nothing? If the regulators regulated when bubbles begin to form we would not have had any financial crisis and unemployment would be at 6%. The reason Washington DC is so busy pointing the finger at Wall Street is because they dont want it pointed at themselves or the majority of the voters who over paid for more than they needed or as part of some dumb #$% get rich quick scheme, although they share a large part of the blame. Too much focus is on the short term political ruse and whining of ppl that simply made bad decisions, diverting our attention away from long term growth and prosperty. Cutting your leg off to stop pain arising from a cramp in your foot is effective, but is it the smartest course of action?
I think Unions get blamed for more than their actual guilt.
Just one example would be Germany. They are heavily unionized and while they surely have their own problems, they seem to be in a position of greater strength than yours truly.
IMO the vast majority of guilt lies amongst the politicians and enabled corporate chieftains. Please don’t misinterpret this as being anti-business. But there isn’t a first world union in the known galaxy that can compete with a third world worker.
Just isn’t happening.
Britain is talking about reining in their Casino games also because they are aware of the the house of cards it creates .
Its a faulty argument to say that we must keep the status quo because otherwise we won’t be competitive . We can change back to systems that were effective for decades (however protective they were )in the past ,in spite of this notion that the New World Order that crashed we are stuck with .
Its fine to blame Unions ,but Unions wouldn’t of been a issue had we not allowed improper trade balances to begin with .
And a lot of the issue with Unions was that Big Business underfunded the pension plans just so they could look more juicy on the Stock market rigged numbers for starters .
None of the Wall Street shills can explain why the system here in American functioned pretty well for decades that allowed for a good growth of the middle class while the
Industrial Complex got a fair share of the profits . Wall Street wasn’t making the kind of greed numbers they always want ,so they finally slow but sure bribed the Politician to set up a stacked deck in their favor . It’s like anything ,if the balance scales swing to much in one direction it creates absurd distributions of the wealth that aren’t productive .
they dont want it pointed at themselves or the majority of the voters who over paid for more than they needed or as part of some dumb #$% get rich quick scheme…
If the only problem we faced was the housing bubble, then we could ‘let the chips fall where they may’, give the FBs and the banksters a good reaming, and lessons could be learned. Unfortunately, the banksters created umpteen trillion dollars worth of bubble-based derivatives, which basically ensured that the system had to be bailed out- the alternative was catastrophic.
The banksters have created a defense mechanism with derivatives that makes them immune to the workings of a free market. It’s like when a country creates a nuclear bomb- suddenly they’re untouchable. If taking away the banksters’ weapons of mass financial destruction causes them to move elsewhere, does anyone really think we’d be worse off for the loss? I sure don’t. They’re awfully expensive to have around. And they sure haven’t hedged our risks.
Awww, are some rich people about to feel some pain? From their OWN mistakes?
You aren’t going to get sympathy from the millions of Americans whose jobs they offshored.
As for “it was the unions”, that’s bullcrap. It was Wall St. and the BODs of the large corps that were looking for a bigger and bigger return on their PERSONAL stocks in an economy that relied on 75% consumer spending, all the while, cutting the very consumers wages they needed to keep the engine running.
It is a FACT that the wealthiest group of people in this country saw their incomes rise 400%+ in the last 30 years while millions saw their income sink below inflation.
Feel the pain, Marie Antoinette.
“As for “it was the unions”, that’s bullcrap. It was Wall St. and the BODs of the large corps that were looking for a bigger and bigger return on their PERSONAL stocks in an economy that relied on 75% consumer spending, all the while, cutting the very consumers wages they needed to keep the engine running.”
It wasn’t that the Unions wanted it to happen, it was their greed was a major factor in the economics that resulted in such shift (i.e., you cant add additional costs and get paid more than you are worth and expect to keep your job for long - unless you work for the government). Similarly, I dont think the government wants to destroy jobs in the US. It’s just that they either dont understand how all the pieces fit together or are just trying to do what they perceive the voters want, regardless of whether it is in the Country’s best interests.
But they weren’t being paid more, with some rare exceptions such as the longshoremen (whose jobs were being automated away at the same time, so payroll was actually dropping for their employers) and, briefly, auto workers (but only the ones with seniority).
Instead, the unions took their pay in the form of benefits. In many cases their real paychecks shrunk as their portion of health care costs increased. Health care costs have increased faster than the rate of inflation for two decades. Pharmaceutical companies, top physicians, hospital administrators, HMOs, and medical device manufacturers have made out like BANDITS.
Union and non-union (service sector) wages have NOT kept up with inflation. Meanwhile, education and medical expenses have gone through the roof (not to mention housing until quite recently). This is why student loans have ballooned (vicious cycle, really, as schools have taken FULL advantage) and so many households have gone bankrupt.
IMO, instead of student loans we should have free state universities funded by the government. That would put the proper discipline on spending, I think, for state and private schools. You wouldn’t be hearing about million plus public uni president salaries or $80K private tuition bills. If this sounds like pie-in-the-sky, just remember they do it in Germany (foreign students do pay tuition) and they have some of the best educational institutions in the world. (They also have exit exams/certificates at the high school level as well as technical high schools and apprenticeship programs so that you can exit at grade 13 prepared to make direct entry into the workforce.)
And oh yeah, no fancy glass facades on German schools. Poured concrete and blackboards. Carpets and brass nameplates and PowerPoint don’t cause students to learn material any better. (PP if anything has the opposite effect!)
Maybe Unions should 1) Go back to representing workers instead of spreading neo communism and 2) Start being a bit more flexible with benefits and wages during tough times. I find them to be just as greedy as the bankers.
Unions have been taking pay cuts for the last 20 years, Rip Van Winkle.
“America could in fact be a first class leader if we kept the majority of brain trusts and debt servicing here, and outsourced menial tasks.”
I hate to break it to you Nat, but the brains trust has been migrating off shore for about the past five years. Outside jobs professional employment requiring a security clearance, government jobs, and health care jobs the future is quite bleak.
Maybe we can all regulate each other for a living.
Big Finance is in a bubble and it is the bubble maker of all other bubbles. Big Finance doesn’t respect capital. Look at how it spent capital during the dot com and housing bubble eras. The culture has changed. It’s a short-term trading culture. Why would anyone doom a nation to perpetual malinvestments simply for short term profits?
Won’t someone please think of CEOs?!
http://www.youtube.com/watch?v=SiO9lmeOOjM
marktMaven Fl and ecofeco …..You two just said it all in the two posts right above me .
Hey, boyz and girlz, Bammy’s forming an “Oil Spill Panel”. Wowie Zowie! That’ll show ‘em.
Meanwhile, the anus on the Gulf floor continues to spew forth. Unbelievable.
I’d like to hear more about the theory that BP was trying from day one to save the well. Even from a totally uniformed point of view it seems that solutions like “top kill” and “junk shot” should have been tried from the start. I mean, just bury the darn thing and worry about getting to that deposit later. Is there more to it?
should have been tried from the start ??
I agree…I can’t understand why stopping the bleeding wasn’t priority one from the start…
Yes, there is.
I posted this late the other day, so anyone here want to argue about whether Shell & Exxon-Mobile CORPORATIONS are “DONATING” these supplies & equipment to BP a foreign oil company?
Estimated rate of oil spill no longer holds up:
By Steven Mufson and David A. Fahrenthold
Washington Post Staff Writer
Friday, May 21, 2010
Inquiring minds would like to know: “BP, how much oil do you “estimate” is leaking?”
BP: “…Well, so, here’s what we’re saying”:
1st day: “5,000 barrels a day”
2nd day: “5,000 barrels a day”
3rd day: “5,000 barrels a day”
4th day: “5,000 barrels a day”
5th day: “5,000 barrels a day”
.
.
.
33rd day: “5,000 barrels a day”
Inquiring minds reporter: “There are some estimating the leak at 80,000+ barrels a day…”
silence…
Inquiring minds reporter: “If a barrel equals 42 gallons then that equates to…
3 Million 360,000 gallons per day, is that correct?”
No worries, another American Oil Corporation is on hand to help…you think there’s a possibility they might make a profit $$$$$ on “The Bandaid Cure” ?
Exxon Mobil Ties:
Corexit is a product line of solvents produced by Nalco Holding Company.
One variant was used in the 1989 Exxon Valdez disaster in Alaska. In 2010, Corexit EC9500A and Corexit EC9527A were used in large quantities in the Deepwater Horizon oil spill. On May 19, 2010 the EPA gave BP 24 hours to choose less toxic alternatives to Corexit, selected from the list of EPA-approved dispersants on the National Contingency Plan Product Schedule, and begin applying them within 72 hours of EPA approval of their choices. BP has used Corexit 9500A and Corexit 9527A thus far, applying 600,000 US gallons (2,300,000 l) on the surface and 55,000 US gallons (210,000 l) underwater.
Nalco has had ongoing ties to Exxon. In 1994, Nalco and Exxon Chemical Company announce the formation of Nalco/Exxon Energy Chemicals, L.P. to provide products and services to all facets of the petroleum and natural gas industries. Then in 2001, NALCO, which then was called “Ondeo Nalco,” strengthened its leadership role in the petroleum industry when Nalco/Exxon Energy Chemicals, L.P. became became part of the company through redemption of Exxon Mobil stock in the joint venture. Today, Daniel S. Sanders, who previously was president of Exxon/Mobil Chemical Company, a subsidiary of Exxon Mobil, serves on the company board of directors
Toxicity
A version of Corexit was widely used after the 1989 Exxon Valdez spill and, according to a literature review performed by the group the Alaska Community Action on Toxics, was later linked with health impacts in people including respiratory, nervous system, liver, kidney and blood disorders. But the Academy report makes clear that the dispersants used today are less toxic than those used a decade ago.“
According to the EPA, Corexit is more toxic than dispersants made by several competitors and less effective in handling southern Louisiana crude. Corexit EC9500A (formerly called Corexit 9500) was 54.7 percent effective in handling Louisiana crude, while Corexit EC9527A was 63.4 percent effective in handling the same oil.
Separately, the EPA told BP officials Wednesday that the company had 24 hours to choose a less toxic form of chemical dispersant to break up the oil spill and must apply the new form of dispersant within 72 hours of submitting the list of options.
The move suggests that federal officials are concerned that the unprecedented use of dispersants could pose a significant threat to the Gulf of Mexico’s marine life. BP has been using two forms of dispersants, Corexit 9500A and Corexit 9527A, and so far has applied 600,000 gallons on the surface and 55,000 underwater.
A spokesman for Rep. Jerrold Nadler (D-N.Y.) said that on Thursday, BP ordered 60,000 gallons of Dispersit — a less toxic dispersant preferred by many environmentalists and lawmakers.
Hey, boyz and girlz, Bammy’s forming an “Oil Spill Panel”. Wowie Zowie! That’ll show ‘em.
Meanwhile, the anus on the Gulf floor continues to spew forth. Unbelievable.
Rand Paul apparently thinks the President is being too tough on poor ol’ BP. Mr. Paul seems to think BP (all corporations?) shouldn’t be held accountable for their misdeeds: “What I don’t like from the president’s administration is this sort of, ‘I’ll put my boot heel on the throat of BP’ … I think that sounds really un-American in his criticism of business.”
Criticizing business is un-American? I thought the Son of Jeebus was supposed to be the real deal, a Third Way, the proverbial bolt of lightning from the sky and all that other superlative stuff …
Oops, apologies for the extra italics.
You’re right. A president saying he is going to put his boot on the necks of Americans is perfectly reasonable rhetoric.
BP is British. Now can we boot ‘em?
The subject incident actually occurred Thursday, May 6th. What was interesting is that markets dropped to almost exactly the same level as the weighted bottom of what they are now calling the “flash crash” before bouncing up. I believe the flash crash was really triggered by computer generated trading programs tied to currencies and various sell triggers linked to complex algorithms that all hit their triggers in a 30 minute period. There is some temporary support at this point. It is great for funds to have their programs work automatically so they can take Fridays off to yacht, but when they all hit at the same time, bad stuff happens.
Arent you confident in your retirement knowing the stock market is the modern day casino?No need to head to vegas anymore right?
Remember when your losses occur they always tell you investing is for the long haul.It becomes the long haul when you have to sell at a loss right?
Sooner or later, the whole mess will collapse under its own weight. It’s inevitable. I don’t think anyone’s much worried about the ancient Roman exchange these days.
Speaking of casinos, I have been playing with LVS. It gyrates about 8% a day. So it is kind of a fun stock to buy after it drops 15% and sell on the upside with fun money, then repeat. It’s hard to invest for the long haul when the rules are changing daily eliminating any certainty. If you must lie with dogs, try to understand them. They are somewhat predictable, but the occasional bite can be frightening.
Excellent advice. And, thanks for the tip!
Please note that LVS is only a guilty pleasure that came to mind when casinos were mentioned. I do not recommend it as a significant part of anyone’s long term investment strategy, but I do love roller coasters.
“…f you must lie with dogs, try to understand them”
Ha, clue #1…what they eat, determines their farts…
How can people not see this thing is a Mania? It usually starts with some kind of displacement like technology, deregulation, and so on, and ends when the masses realize their is a con afoot.
Technology has made it easier for the masses to participate in the trading game. It’s been two weeks and there is no explanation for the flash crash. Retail traders are having problems gaining access to their online accounts. Not to mention, the regulators and legislators appear to be captured by Big Finance.
Lack of stability and roller coaster rides always create a fool who
will lose their shirt and a opportunist who will get rich quick . Stable markets don’t give the opportunity to make big money quick .
I think the evidence of how corrupted the financial sectors became is
in the fact that they had to be bailed out by the government ,a fact that the shills from Wall Street like to ignore . Currently all prices are fake ,based on Government intervention and padding of the pockets
of Monopolies and chosen Unions and TBTF rigged money making market creation games . Can you even imagine a Government making a law that the population has to purchase overpriced Health Policies for instance ,or the Government bailing out Credit Default Swaps gambling games .
Until the government gets into the business of true regulation of the various industries and stops padding the pockets of whomever the biggest lobbyist are ,everything is just a rigged game for the chosen . This current form of financial and Industrial complex markets is not the American way .
People who say well just play the rigged games and get rich quick
have no ability to see what kind of future that will bring overall
when the house of cards truly crashes for good .
‘What was interesting is that markets dropped to almost exactly the same level as the weighted bottom of what they are now calling the “flash crash” before bouncing up.’
So far, at least…
Plan B: Skip College
Perhaps no more than half of those who began a four-year bachelor’s degree program in the fall of 2006 will get that degree within six years.
For college students who ranked among the bottom quarter of their high school classes, the numbers are even more stark: 80 percent will probably never get a bachelor’s degree or even a two-year associate’s degree.
That can be a lot of tuition to pay, without a degree to show for it.
A small but influential group of economists and educators is pushing another pathway: for some students, no college at all.
We should steer some students toward intensive, short-term vocational and career training, through expanded high school programs and corporate apprenticeships.
======================
I agree with this article; a lot of kids shouldn’t even try going to college…. the spend time/money and get nothing out of it… instead, they should focus on learning skills that will land them a real job…. I have a friend with a MFA in Ballet; she dances for a local company, but works as a waitress at two restaurants to be able to pay for her daily expenses… she has absolutely no skills other than standing on her toes :-/
The military/industrial complex ain’t the only complex out there. There are others and they also don’t like their hegemony questioned.
Do colleges even admit someone in the bottom quarter of their H.S. graduating class?
$$$$$$$$$$$$$
Lack of $$$$$$$.
Yep, and the popping of the higher education bubble would be as healthy for the country as the popping of the housing bubble was.
Some colleges are doing away with SAT scores for admission requirements. I may be wrong, but judging future freshmen strictly on subjective essay contests, smells like desperation. Standards are lowered to accept those that can afford to pay.
Of course the do; there are many colleges that admit students with only GEDs!
Some state schools have an open admission policy to anyone in the state with a high school diploma.
“A small but influential group of economists and educators is pushing another pathway: for some students, no college at all.
We should steer some students toward intensive, short-term vocational and career training, through expanded high school programs and corporate apprenticeships.”
What geniuses, it’s either / or?
Hows ’bout 2 years of College & Vocational trade skill? Perhaps they could learn to diagnose the $45,000 Lexus electrical malfunction & learn to read music.
This sort of thing was common place in the ’70’s…before you needed $10,000 to attend a community college. They’ve only had 40 years to improve on that model…but, nooooooooooooooooooo they gotta create $$$$$$$$$$$ National University or $$$$$$$$$ the University of Phoenix
Go to work 8 hours a day, then get a large loan $$$$$$$$$ to go to school in the evening.
Hah, it took me 10! With a 5-year break in the middle. Maybe I should have learned something more useful, vocational, etc.
I don’t get this…. the Governator has no problem cutting all sorts of services for the general public, but has no issues handing out over $6 billion to the state’s public employees’ pension fund…?
————————————
In California, Governor Arnold Schwarzenegger’s decision to pay his state’s hefty $6.2 billion pension fund contribution to CalPERS, the state’s public employees’ pension fund, comes at a severe cost. To finance the pensions, California will freeze funding for public schools, eliminate its welfare to work program, decrease money for local mental health clinics by 60 percent, and slash state employee pay by 5 percent.
Pension (401k too) money is tribute money to the boyz. Right now they need all the money possible to play with. Maybe they’ll invest it in Canadian or Chinese real estate?
Brett, are you saying that people who held up their end of the deal and put in their 20+ years should get shafted because the other side didn’t?
Would you settle for that? Of course you wouldn’t. Why should they?
Brett
Great post. I told my niece to forget her dream of a low demand degree (child development) and suggested she go to a x-ray/mammo/ultra sound type trade school, getting her prerequisites over at a JC. Great pay vs.education costs, and not much stress. Plus, it’s a real skill. Ballet is one of those pipe dream careers, no offense.
Oh, dont’ worry… I have met so many Russian studies, Ceramics, Ballet graduates over the years that do absolutely nothing with their degrees and still have 60k in student loans… LOL
Brett
I know what you mean. Both my other half and I have solid skills, just no major opportunities to use them right now. My sis and her huband like fluffy, artsy-fartsy, holistic stuff, and haven’t taught the kids to live on planet earth. The kids btw, are in private school.
As my husband (an EE) says about my sis and her hub:
“The rocks in his head, fit the holes in hers.”
LOL… it reminds me of this couple at work:
She’s a English/French major working in sales
He is a free lance artist and sign language interpreter… LOL
and they have three kids
And in the early 1980s when boomers were flooding the job market, the painter who did the rooms was a history major. I think masters degree candidate.
Ouch!
Every wonderful great thing created has been the result of a child reared with x2 “smart” parents who had money.
Like Thoreau or Winslow Homer or…
Engineering is apparently the degree of choice amongst the new Chinese ruling class. They seem to be toiling away at their own bubbles, so no great benefit yet. The Soviet Union and Nazi Germany also skewed heavily towards engineering and science (safer areas of study in totalitarian regimes) and it didn’t do them much good. The British created and ruled the modern world under leaders schooled in the classics (history and culture of ancient Greece and Rome) and they had a good, long run, that we continue today.
There’s a lot to be learned by studying history’s successes and mistakes. Makes you realize it’s not ever ‘different this time’, a trap that many a Wall Street quant/engineer fell into.
College is not - or at least should not be - about getting a skill. If you want to learn a skill, take a 6 month course in something. If you want an education, go to college.
Yes, I love to listen to Cello players long on education & low on skill…
I think this is going to be mandatory soon for unemployed people….you cant sit out 99 weeks….and then claim your skills are outdated.
———————–
take a 6 month course in something
“Yes, I love to listen to Cello players long on education & low on skill…”
Of course you do.
Ki Ki Dee = “TrueHaskell’sGirlfriend™” = “But, but, but…”
Here’s an example of long on education, “short” on skill:
At a very young age, Ma began studying violin, and later viola, before finding his true calling by taking up the cello in 1960 at age four. According to Ma, his first choice was the double bass due to its large size, but compromised and purchased a cello instead. The child prodigy began performing before audiences at age five, and performed for Presidents John F. Kennedy and Dwight D. Eisenhower when he was seven
(Hwy inserts: yo-yo Ma plays Vilvadi with the Amsterdam Baroque Orchestra, track 17: “Laudamus Te from Gloria, RV 589)
You’re a very weird dude.
yo-yo Ma rocks.
As my husband (an EE) says …
Yeah, that’s what we need, an entire world filled with engineers and bean counters. Fun, frugal, and fashion forward!
Groan.
I once insulted an entire table of engineers at a restaurant. My girlfriend at time was friends with several and she invited me to dinner.
While eating I told her I had thought about being engineer at one time and she asked what happened. I said I decided against it. She asked why? I tried to beg off, but she insisted.
I told her that while engineering is a great and noble profession, most engineers don’t really know how to have fun.
Yeah, I got some looks.
You are right - we engineers don’t know how to have fun. But we have enough cash and gold to last through these economic bad times.
We like small things in life such as tech gadgets. $699 for an iPad, hooked up with a mifi, and we are set. While others drive the expensive Lexus cars.
We end up having the last laugh. Look at the job losses a year ago among the Ivy League-educated MBA stock traders!
My freshman year I moved into an apartment and met my new my neighbor, a sophomore EE major as I was carrying all my stuff up the 3 flights of stairs.
Not only did he help me with the heavy stuff, he came by later in the day with a couple of girls who also lived in the building, a 12 pack, and some of the finest pot I have ever had the pleasure to experience.
It was there and then I decided engineers were cool.
I told her that while engineering is a great and noble profession, most engineers don’t really know how to have fun.
This is true. Furthermore, as someone who holds a BA degree in science from a liberal arts school (with a kickass science dept) but who also did some time in engineering school, engineering school is simply not a very good education.
Despite the reputation I have met very few engineers who were competent problem-solvers. A physics education teaches you how to solve practical, real-world problems; an engineering education (let’s exclude MIT & Caltech here–most engineering schools do NOT emulate the MIT model) does not.
EE’s are another story. (Generally the best educated, smartest, most ambitious and talented of all engineers.) And software engineers are not engineers at all.
I’m a software engineer, and I agree to some extent. Software engineering is more an art than engineering. But it is a fun activity and worthwhile experience. I don’t care if it’s called “programming” instead of engineering. However we do more than program. We write analyse system specifications and write software requirements. We write sequence diagrams for the design. We write test plans. We perform integration testing. And somewhere in between we “program.” I have a good math background, as my undergraduate degree was in the mathematics department. But I hardly ever used my math in my field. I used geometrical analysis once to solve a three dimensional vector equation problem and translated that into software. That was around seventeen years ago!
Same deal about gold - I don’t care if one calls gold “metal.” I like it.
AW if I may make a suggestion, tell your husband that his possible best course for the future will be to work in QSM/QE in an industry than utilizes EE. Certification is pretty quick and easy, and most everyone is hiring for that right now.
There are long waiting lists for those degrees, so I gave up on them and went for a less popular (and sadly, lower paying) 2-year degree. But at least I’m out in 3 years instead of 7 or more.
Oops, this was supposed to post next to “X-ray/Ultrasound.”
This makes me sick; why are board members allowed to dictate history in the classrooms. This should be a decision made by historians and teaches
=======================
Texas State Board of Education approves new curriculum standards
Approval came after the GOP-dominated board approved a new curriculum standard that would encourage high school students to question the legal doctrine of church-state separation - a sore point for social conservative groups who disagree with court decisions that have affirmed the doctrine, including the ban on school-sponsored prayer.
Board member Cynthia Dunbar, R-Richmond, another social conservative, opened Friday’s board meeting with an invocation that referred to the U.S. and its history as a “Christian land governed by Christian principles.”
“I believe no one can read the history of our country without realizing that the Good Book and the spirit of the Savior have from the beginning been our guiding geniuses,” she said.
Board members also adopted a standard that calls on high school students to “compare and contrast” the Establishment Clause of the First Amendment - barring establishment of a state religion - with the legal doctrine of church-state separation that emerged from U.S. Supreme Court rulings.
“We need to have students compare and contrast this current view of separation of church and state with the actual language in the First Amendment,” said McLeroy, who like other social conservatives contends that separation of church and state was established in the law only by activist judges and not by the Constitution or Bill of Rights.
why are board members allowed to dictate history in the classrooms ??
Its Texas…What is so surprising here ??
“I believe no one can read the history of our country without realizing that the Good Book and the spirit of the Savior have from the beginning been our guiding geniuses,”
Board member Cynthia Dunbar, R-Richmond, another social conservative
(Hwy can only wonder what Cynthia’s views are on Viagra)
From the “Good Book”: (Isn’t this what David Koresh was trying to establish in TEXAS or course the Gov. Social Security checks & Welfare monies helped to fill the coffers right?)
Judaism, Christianity, and Islam are sometimes referred to as the “Abrahamic religions” because of the progenitor role that Abraham plays in their holy books. In both the Jewish tradition and the Quran, he is referred to as “our Father”. Jews, Christians, and Muslims consider him father of the people of Israel. For Jews and Christians this is through his son Isaac, by his wife Sarah; for Muslims, he is a prophet of Islam and the ancestor of Muhammad through his other son Ishmael, born to him by Sarah’s handmaiden, Hagar.
God’s promise to Abraham that through his offspring all the nations of the world would come to be blessed is interpreted in the Christian tradition as a reference particularly to Christ. In Canaan, Abraham entered into a covenant: in exchange for recognition of Yahweh as his God, Abraham would be blessed with innumerable progeny and the land would belong to his descendants.
Abraham Later years:
Sarah is said to have died at the age of 127, and Abraham buried her in the Cave of the Patriarchs (also called the Cave of Machpelah), near Hebron which he had purchased, along with the adjoining field, from Ephron the Hittite.
After the death of Sarah, he took another wife, or concubine, named Keturah, who bore Abraham six sons: Zimran, Jokshan, Medan, Midian, Ishbak, and Shuah.
Abraham is said to have died at the age of 175 years.
I think this proves we have been visited by aliens and we are their creation…and when the earth was less polluted these kinds of life spans would have been considered normal.
It still amazes me how old our founding fathers were well over the average lifespan of 42 years in the 17th century,
——————————–
Sarah is said to have died at the age of 127..Abraham is said to have died at the age of 175 years.
There’s an old joke that the best place to live in Texas is Colorado.
Laugh all you want at the Texas State Education Board, but every state has one and are all just as incompetent in their own ways.
Or maybe you didn’t notice that we have lowest public education scores of all 1st world nations.
This is why I will never want to move to Texas. I am aware there are vocal atheists in Texas, but not vocal enough. Austin and perhaps San Antonio are the more civilized (less religious) places in a sea of cro magnons.
And that is why federalism is great. If you want bible studies in school go to Texas. If you don’t, stay in California.
“…And that is why federalism is great.”
And you have a old truck and some extra chains and don’t like blacks, go to Texas…
You have to stop drinking this early in the morning.
To an extent, but you do realize that the Constitution guarantees a democratic form of government … as well as certain other rights which have been interpreted by the Federal courts & so on & so forth…
So I’m afraid Biblestan will have to wait for the fall of the USA.
The Texas Capitol building has just installed airport-style metal detectors to screen visitors. There will be a fast lane around it though, for ID-badged state employees AND for visitors holding concealed weapons permits.
I kid you not.
I miss Molly Ivins.
*sigh* Me too.
Please. Molly Ivins was every bit as bad as Glenn Beck. A raving partisan who made no attempt to see the other side of an argument.
Jim Wyckoff : “Another potentially bearish market factor for gold that is gaining more attention this week, and which has likely caused some additional selling pressure in gold, is the specter of price deflation. With crude oil prices declining around $20.00 a barrel in a short time, and with copper and lumber futures prices in a steep price downtrend, combined with world stock markets that are sputtering, traders are now wondering about a double-dip world economic recession that could be accompanied by commodity price deflation. Price deflation is the archenemy of all raw commodity market bulls.”
“Price deflation is the archenemy of all raw commodity market bulls.”
Price deflation is the friend of those laden with cash.
Lower apartment rents, lower home prices are on the way. We’ll start seeing new car prices coming down. Hyundai Genesis ($33,000) competing with the BMW 5 series ($49,000). Hmm!
A Hyundai and a BMW only compete against each other in the minds of a Hyundai marketing employee.
Do you really see someone out shopping for a 5-series thinking, hey maybe I should go to the Hyundai dealer and see what they also have to offer? Neither do I.
Well there is always status. And I hear that the feel of a BMW, Audi, or Benz is distinctive and solid, compared to what the Asian imports deliver.
It just does not make sense to me to put $50,000 into a car unless I had $1,000,000 cash and wanted to live it up a bit.
+1, Bill.
With the Euro declining, maybe BMW 5-series cars will soon be priced a lot closer to the Genesis.
Sheet lumber product prices (OSB, etc.) have climbed considerably from their lows.
Can you say 8000 dollar tax credit.
Let’ s see how they do over the next 6 mo.
Several weeks ago, on another site, I remember seeing a post from a fella who claimed that orders for three no-nonsense commodities (one was paperboard, I forgot the others) - fell off a cliff at the start of 2Q. I wonder if there was something to that? His claim was that those particular inputs would be indicative of a sharp fall off in finished product orders.
This is weird to me because every level of govt, local, state, and fed, is furiously spending money on road* and building projects (not to mention buying us new buses) in Gainesville. And those eat commodity inputs so… am I just living in Luckyville?
*-I’ve never had to deal with so many road detours in five years of working for the City
Granted, private/commercial RE building has dropped off a cliff. We even have some weed lots with “private property” vainly posted on the property line and a half-finished building a la the great Boston CRE crash of ‘89. (But most of that labor was illegals who didn’t spend their money here except maybe on beer and have since gone home.)
Could this be the dislocation associated with the unwinding of some large dollar carry trades? Ie, Euro drops, USD “rises”, dollar carry trades unwind, scads of money lost, commodities sold to pay off debts, drop in all asset classes?
Recall something similar happened when the Yen carry unwound.
Disclosure: due to trading without paying sufficient attention I am totally on the wrong side of this trade and feel like a moran.
Ben, I’m sorry my verbosity landed me in your spam filter–could you please let my comment out of pokey? :DDD
“Frequently people say, “you never complain when the market’s higher and you get this action”. I want to make it clear to everyone that I thought the last 15 minutes up was outrageous and shows how broken everything is. Just ridiculous… And should be investigated”.
~Jim Carmer
Shorts took profits ahead of the weekend, that’s all. The PPT would have done its work in the pre-market and early day Friday when the market tested the “flash crash” levels and Dow 10K.
I had planned to do the same thing towards the end of the day but got invited to a late 3-martini lunch and didn’t get around to it. Here’s hoping Monday proves you right.
Hey someone in the expertise of Key West.
What is the status with Key West now? I have a friend that is not a bubble blog person wanting to buy a home there.
What are their current medians?
Please someone in the know respond as he is out there actively looking and feels he needs to make a decision this weekend on houses he is looking at.
Have your friend track crude prices before making any decisions.
Chances are he’ll have 40-50 barrels worth to mop up if he does buy.
Funny u say that, he works for The Coast Guard.
Seriously does anyone have anything of value to say about that market?
I feel bad for the guy but I don’t know enough about Key West to tell him that he would be over paying grossly.
He is in some frantic rush, I have no idea why he is, maybe a realtor told him to HURRY HURRY and he listened.
Why “this weekend”? Why not wait and see how hurricaine season plays out?
And the oil season.
I was in Key West a few months ago. Housing prices there look cheap compared to DC, but are outrageous when considering local incomes. We saw absolutely no high-paying jobs in the area. His coast guard salary might be the highest rung on the ladder down there. Just send him a link to the average incomes and rents.
Does anyone know info about Swedish real estate? My daughter is looking to rent or buy in Gothenburg. According to her, the real estate transaction and scene are totally different from the U.S. It’s like an auction rather than negotiation with the seller. The seller advertises the price of house or “flat.” Then there is a kind of “open house” then all interested buyers bid against each other, without knowing the identities of the other bidders. The highest bidder then signs the contract, usually the same day. However, the buyer does not get to move in until 2-5 months later, depending on the contrac which allows the seller time to move out. The prices are still bubbly since the wait list for rentals is measured in terms of YEARS! Unable to find a rental, she is looking to buy. Ironically, it’s FASTER to buy a house/flat or to rent. I don’t get it. Can someone shed a light on this? Thanks in advance for any info.
Might help explain why our Swedish friends became US citizens last year. They live in “The O.C.”, renting a fine home in Tustin Ranch.
PS,
They had no trouble finding a great rental…
What do you mean that the wait for rentals is years long? What do people do if they need to move and do not want to buy? Do they set up tents? Advertise to be accepted into a group house?
What you describe makes no sense at all unless no one ever moves anywhere other than places where they can move in with family. Your daughter needs to do much more research.
I heard about four years ago on this very blog that most apts in big cities in Sweden are sublet with the subletter paying more than the primary lessee. Apparently this continues to be the case, only, if possible, it’s gotten worse.
Swedish currency did not go boom like their neighbors’.
Posted this late yesterday:
I’m looking for some guinea pigs to try out a beta version of the JT Extension. If interested, please email via the link on the web page (linked at my name).
I’ve added a menu with links to lavi’s search page as well as the extension’s web page, and changed the way it tracks read comments so that if you refresh the page, or accidentally click a link that doesn’t launch in a new window, you can go back and your unread messages are preserved.
I use it every day, but it’s helpful to get some feedback from people when trying new things.
When does the version for Safari come out?
Constitutionality you can believe in!
In retrospect, it sounds like Roosevelt was almost as communistic and dictatorial as was Stalin (hopefully without the purges!).
* The Wall Street Journal
* POLITICS
* MAY 22, 2010
Paul Remarks Have Deep Roots
By JONATHAN WEISMAN
Republican candidate Rand Paul’s controversial remarks on the 1964 Civil Rights Act unsettled GOP leaders this week, but they reflect deeply held iconoclastic beliefs held by some in his party, and many in the tea-party movement, that the U.S. government shook its constitutional moorings more than 70 years ago.
Mr. Paul and his supporters rushed to emphasize that his remarks did not reflect racism but a sincerely held, libertarian belief that the federal government, starting in the Roosevelt era, gained powers that set the stage for decades of improper intrusions on private businesses.
Mr. Paul, the newly elected GOP Senate nominee in Kentucky, again made headlines Friday when he told ABC’s “Good Morning America” that President Barack Obama’s criticism of energy giant BP and of its oil-spill response was “really un-American.”
That followed a tussle over the landmark civil-rights law, which Mr. Paul embraced after suggesting Wednesday that the act may have gone too far in mandating the desegregation of private businesses. Late Friday, NBC said that Mr. Paul had cancelled a scheduled appearance on the Sunday morning show “Meet the Press,” a rare development in the history of the widely watched political program. The network said it was asking Mr. Paul to reconsider.
In tea-party circles, Mr. Paul’s views are not unusual. They fit into a “Constitutionalist” view under which the federal government has no right to dictate the behavior of private enterprises. On the stump, especially among tea-party supporters, Mr. Paul says “big government” didn’t start with President Obama, Lyndon Johnson’s Great Society of the 1960s or the advance of central governance sparked by World War II and the economic boom that followed.
He traces it to 1937, when the Supreme Court, under heated pressure from President Franklin Roosevelt, upheld a state minimum-wage law on a 5-4 vote, ushering in the legal justification for government intervention in private markets.
Until the case, West Coast Hotel v. Parrish, the Supreme Court had sharply limited government action that impinged on the private sector, infuriating Mr. Roosevelt so much that he threatened to expand the court and stack it with his own appointees.
“It didn’t start last year. I think it started back in 1936 or 1937, and I point really to a couple of key constitutional cases… that all had to do with the commerce clause,” Mr. Paul said in an interview before Tuesday’s election, in which he defeated a Republican establishment candidate, hand-picked by Senate Minority Leader Mitch McConnell (R, Ky.).
Mr. Paul has said that, if elected, one of his first demands will be that Congress print the constitutional justification on any law is passes.
Last week, Mr. Paul encouraged a tea-party gathering in Louisville to look at the origins of “unconstitutional government.” He told the crowd there of Wickard v. Filburn, a favorite reference on the stump, in which the Supreme Court rejected the claims of farmer Roscoe Filburn that wheat he grew for his own use was beyond the reach of federal regulation. The 1942 ruling upheld federal laws limiting wheat production, saying Mr. Filburn’s crop affected interstate commerce. Even if he fed his wheat to his own livestock, the court reasoned, he was implicitly affecting wheat prices. If he had bought the wheat on the market, he would subtly have raised the national price of the crop.
Following his comments on the 1964 Civil Rights Act, Rand Paul said Friday morning President Obama’s criticism of BP has sounded “really un-American.” WSJ’s Jerry Seib joins the News Hub to discuss the latest controversy and the political damage of Paul’s recent comments.
“That’s when we quit owning our own property. That’s when we became renters on our own land,” Mr. Paul told the crowd.
In an interview, Mr. Paul expressed support for purely in-state gun industries, in which firearms are produced in one state with no imported parts and no exports. Guns produced under those circumstances can’t be subjected to a federal background check, waiting period or other rules, he reasons.
“I’m not for having a civil war or anything like that, but I am for challenging federal authority over the states, through the courts, to see if we can get some better rulings,” he said.
To supporters, such ideological purity has made the Bowling Green ophthalmologist a hero.
“He’s going back to the Constitution,” said Heather Toombs, a Louisville supporter who came to watch him at a meet-and-greet at a suburban home last week. “He’s taking back the government.”
…
“…In retrospect, it sounds like Roosevelt was almost as communistic and dictatorial as was Stalin”
Silly Bear, there’re are other POV’s, for example:
The lesson of Rand Paul: libertarianism is juvenile
By Gabriel Winant, Salon
“…Think about the New Deal. Although libertarian ingrates will never admit it, without the reforms of the 1930s, there might not be private property left for them to complain about the government infringing on. Not many capitalist democracies could survive 25 percent unemployment, and it doesn’t just happen by good luck.”
Right ,regulation and intervention is necessary at times ,as in breaking up monopolies ,or price fixing ,or all the ills that can come about with pure capitalism .
Why did Great Depression happen anyway ? Wasn’t it the driving up of prices and stocks based again on faulty lending of those time and all the different speculation it created .
Trying to use lending as a means to get people to buy things they can’t afford by any reasonable ratios has always been the trick of the sellers of products and the living of the lenders . Look at how insurance drives up the price of those products that are insured . While most people have to finance a car and a house if they want one ,how much can you raise the price because it’s being financed
through future time is the question . How much lower would the cost of health care be if it was just based on out of pocket funds used, rather than insurance funds for instance ?
Getting private business to regulate itself is like getting a crack addict to control their habit. Only an idiot believes either will work.
And corporations are not “private business”, although they like to make fools think they are.
If Roosevelt hadn’t taken as much control as he could, the Communists would have. The Communist party was pretty big back then. And let’s not forget about the group of big business leaders who literally tried to execute a coup d’etat against the Roosevelt admin.
ecofeco ….I never have believed that Industry could self-regulate and anybody who believes that doesn’t know human nature .
Nice that you brought up the Communist factor that was gaining
power at the time because it very well could of gained a major foothold verses what happened .
I have always believed that regulated Capitalism with the rule of law
created the most incentives for effective production and freedom to the extent that it’s possible .
The more I read about the financial reform bill, the more I believe it will turn out even worse than health care reform. We are frackin’ doomed. The way things are shaping up, it may turn out even worse in America than in the Soviet Union just before it collapsed.
Here is a little something that may cause financial instability:
1) The U.S. government is artificially propping up asset prices, as anyone who can see and knows how to read must realize by now.
2) Hence asset prices are generally overvalued, and back in a bubble.
3) Maybe this time is different, but otherwise, so far as I am aware, every other bubble in 800 years of financial folly has ended in a crash.
* The Wall Street Journal
* OPINION: EXTRA
* MAY 1, 2010
Planned Economy, Privacy Problems
The financial regulation the Senate is debating may undo your financial privacy.
By JIM HARPER
From the Cato Institute
If someone asked you what’s wrong with a planned economy, your first answer might not be “privacy.” But it should be. For proof, look no further than the financial regulation bill the Senate is debating. Its 1,400 pages contain strong prescriptions for a government-micromanaged economy—and the undoing of your financial privacy. Here’s a look at some of the personal data collection this revamp of financial services regulation will produce.
The “Office of Financial Research” (sec. 152) will have a “Data Center” (sec. 154) that requires submission of data on any financial activity that poses a threat to financial stability.
Use your noggin, now: Will government researchers know in advance what might cause financial instability? Will they home in on precisely that? No.
This is government entrée into any financial activities federal bureaucrats suspect might cause instability. It’s carte blanche to examine all financial transactions—including yours. (Confidentiality rules? The better view is that privacy is lost when the government takes data from your control, but we’ll come back to confidentiality.)
The Office of Financial Research is also a sop to industry. Morgan Stanley estimates that it will save the company 20 to 30 percent of its operating costs. The advocates for this bureaucracy want to replace the competitive environment for financial data with a uniform government data platform. Students of technology will instantly recognize what this data monoculture means: If the government’s data and assumptions are bad, everyone’s data and assumptions are bad, and all players in the financial services system fall together. The Office of Financial Research itself poses a threat to financial stability.
But all that’s about money. On with privacy…
…
I have to guess this guy must be a blind man, judging by his inability to gauge the effect of existing TBTF policy in destroying competition in the financial sector.
The Arbiter of Success? The Fed.
Peter Wallison
Peter J. Wallison is the Arthur F. Burns Fellow in Financial Policy Studies at the American Enterprise Institute. He was general counsel of the Treasury and White House counsel in the Reagan administration.
Leaving aside the particular elements of the bill, its principal thrust is to subject virtually all large and complex nonbank financial institutions — bank holding companies, finance companies, insurers, securities firms and hedge funds — to government oversight and control. The Fed will have the power to set capital, leverage and liquidity levels for all these firms, define their permissible activities and break them up if they are deemed to be a danger to the financial stability.
Competition has been the governing factor in the financial industry. No more.
Along with control, the government will have a number of mechanisms for taking over and winding down the institutions it regulates. Together, these authorities will give the government life and death power over the largest financial institutions in the United States. In effect, it sets up a kind of partnership between the government and the largest firms; they cannot afford to ignore the government’s demands, and the government will have an implicit obligation to make sure they don’t fail.
Prior to this law, competition was the governing mode in the financial industry. It drove institutions to operate efficiently, innovate, take risks and enter new markets. The future will be very different.
Securities firms, for example, will need the approval of the Fed — explicit or implicit — before they enter the business of, say, hedge funds. The hedge funds will argue to the Fed that securities firms will be endangering their safety and soundness if they enter the risky hedge fund business. Moreover the idea that the Fed can establish the correct capital, leverage and liquidity levels for each of these very different business models is a fantasy. If finance companies are required to hold more capital, or reduce their leverage, it will limit their ability to compete with bank holding companies.
The Fed, and not competition, will be the ultimate arbiter of success.
…
“Prior to this law, competition was the governing mode in the financial industry. It drove institutions to operate efficiently, innovate, take risks and enter new markets.”
Hey, Lehman Bros body just twitched…alive or dead?
“I’m not debt yet!”
Some of the leveraged casino games of Wall Street casinos should be barred altogether and you can’t get enough regulation to keep those games from creating instability .
The casino owner, Megabank, Inc, makes its money in the good times and bad by collecting fees on all casino bets it sponsors, and extra cash in the bad times by collecting bailouts on any bad gambling debt that lands on its balance sheet.
If someone thinks the financial reform bill changes anything in the above description, I eagerly await your explanation why.
The Cato Institute? Get real.
Why should an industry that wrecked as much havoc and destruction as Wall St. be allowed to keep their privacy?
Why do so many businesses think we, the public, OWE them a living and that they should be free do whatever they feel like?
The Cato Institute? Get real
Yeah, I was about to say the same thing. I wouldn’t get too worried by the Cato Institute’s dismissal of the bill- I’d be more worried if they supported it, being the shills for Wall Street that they are.
Their opposition is a good sign.
I just spoke with a Realtor who is selling a log home kit. I’ve seen it for sale for a number of months. Nice looking home. Might as well toss out my line and see what happens. I asked he was acting as an agent or if it was his personal home. It’s his home that he decided not to build. After some other small talk he finally says “just so you know there is a lot of interest in this home. Someone is coming up tomorrow to look at it. I’m not trying to give you the used car salesman routine here but……”.
Coming to look at what? The shrink wrapped kit in the manufacturers yard, located in another state no less?
Oh God I love false bravado. I can almost guarantee this clown is completely overextended and is trying to act as if he is in a position of strength. I was going to make a polite inquiry but after his parting shot I have shifted gears. I was very close to telling him to jam it right there but thought better of it. I am either going to steal this thing from him or pass but torment is guaranteed.
This is going to be fun!
Suggesting to people that they can’t have something makes them want it more. I recall seeing this work on 20 month old. The father wanted him to eat something on his plate. The father took it away and said, “You can’t have any.” The child whined, reached for it and devoured it.
Absolutely fascinating. The top sales types are supposed to be experts at “hacking the human”.
Bloomberg
Greek Crisis Is Latest Excuse for Fed’s 0% Rate
May 18, 2010, 5:02 AM EDT
More From Businessweek
Commentary by Caroline Baum
May 18 (Bloomberg) — There is never a good time for central banks to raise interest rates. Some times are worse than others. A crisis qualifies as the worst of times, providing an opportunity, and excuse, to keep rates low.
What happens when crises start to run into one another? At some point, the Federal Reserve will have to depart the safety of its near-zero-percent interest-rate mooring, balancing the financial system’s current readings with the potential for gathering storms.
A brief history is in order. The savings and loan crisis in the late 1980s, related to real-estate losses, required an extended period of low rates (3 percent fed funds) to refloat the banks.
The fallout from the Internet and technology stock-market bubble a decade later ushered in “exceptionally low levels of the federal funds rate for an extended period,” to borrow current Fed parlance. Back then, in 2003-2004, 1 percent qualified as exceptionally low. It was too low as well, inflating a housing bubble, policy makers’ protestations to the contrary notwithstanding, with some help from skewed home- ownership incentives.
The housing bubble begat the subprime-mortgage crisis, which infected banks far and wide, large and small, spawning a financial market panic (another crisis) and near-death experience for the banks (a banking crisis).
…
Rates prolly won’t go up until overseas labor costs are too expensive that wages over in the USA increase.
The Iowa Independent
The Fed dismissed housing bubble in 2004
By Annie Lowrey 5/3/10 9:08 AM
The Federal Reserve releases minutes of its meetings discussing monetary policy and reviewing risks to the economy on a six-year delay, and last week it released its data from 2004 — the year that housing economists first started really ringing the alarm bell about the risk of a housing bubble.
These early bubble-callers often pointed to the clear distortion in the rent ratio, or the price of the home divided by the cost to rent it for a year, as a sign of a market gone awry. Generally, homes cost on average 15 or 20 times the cost to rent them. But starting in the late 1990s, the cost of buying a home started to seriously outpace the cost of renting.
In 2004, the Fed board discussed the possibility of a housing bubble intermittently, usually for just a few sentences at a time. But in June, it looked at a rent ratio graph and discussed it at length. Here it is, with the upper chart showing housing and the lower chart showing commercial real estate, and the red line the one to watch:
…
But clearly, nobody could have seen this coming. *cough*
US bubble trouble: the Fed cannot blow it again
ROGER LOWENSTEIN
May 5, 2010
Ads by Google
Play Bubble Trouble Here
The Fed must do its duty.
NO, GOLDMAN Sachs did not single-handedly launch the financial crisis, no matter what the politicians are saying. The turmoil that struck the markets in 2008 also had deep roots in another powerful institution: the US Federal Reserve.
One of the most troubling questions in the aftermath of the crisis is why the Fed didn’t intervene to deflate - or ”prick” - the credit bubble, especially in home mortgages, before it got so big that its burst would threaten to take down the economy.
…
While raising the Fed discount rate would of helped prick the bubble ….
One of the reasons the bubble continued is that money was coming from the unregulated markets that had a life of its own apart from the regulated banks that were selling into that market . When we ended up bailing out credit default swap bets like in AIG you see a disconnect from the regulated bank market . All the house of card financial games were interrelated .
Most of the guys running the shadow system sit on the NY Fed board.
It wasn’t GS, it was the Fed. Because those are two totally separate, not-connected, in-no-way-related institutions.
Because
Cheap energy
and Cheap labor in China
and Technology
Created a huge risk for deflation. Central banks presidents will kill their mother to prevent deflation.
Greenspan wanted to keep housing bubble concerns from public, new transcripts show
BY Amanda Mastrull
DAILY NEWS WRITER
Tuesday, May 4th 2010, 12:17 PM
According to newly released transcripts, former Chairman of the Federal Reserve Alan Greenspan wanted to keep concerns about the housing bubble a secret.
When the housing bubble was first becoming apparent to the government, the then-Chairman of the Federal Reserve Alan Greenspan wanted to keep monetary concerns a secret, the Huffington Post reports.
New transcripts released of the minutes of 2004’s Federal Open Market Committee meetings show Greenspan’s hesitation to have federal transparency came down to thinking that the federal officials involved knew better than the American public.
“We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand,” Greenspan said in March 2004.
At another point during that meeting, Jack Guynn, a Federal Reserve bank president from Atlanta, expressed his worries about the market.
“The substantial run-up in house prices, which we have followed in Florida and also see in the populous Northeast and West Coast of the United States, may be at least partially attributable to unusually low mortgage rates influenced by our very accommodative policy,” Guynn said.
Still, despite his warnings and the potential impact housing market could have on the economy, the federal minutes of the meeting neglected to mention them.
“Reports from some contacts suggested that speculative forces might be boosting housing demand in some parts of the country, with concomitant effects on prices, suggesting the possibility that house prices might be moving into the high end of the range that could be consistent with fundamentals,” the minutes read.
Read more: http://www.nydailynews.com/money/2010/05/04/2010-05-04_greenspan_wanted_to_keep_housing_bubble_concerns_from_public_new_transcripts_sho.html#ixzz0ogVS4IT8
Surprise, surprise.
“We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand,” Greenspan said in March 2004.
That is one of the most appalling quotes I’ve heard in a long time. Very revealing of his mindset. For our own well-being, we must be kept in the dark. Thanks for shouldering all the responsibilty, Atlas. Heckuva job.
Nobody saw it coming …yep right . Even Greenspan has used the defense that he didn’t see it . This only proves that giving the Fed to much power can put us in the position of being lead down a path of destruction if we get a screw-ball in that office .In fact I think the
current Fed Chairman is a sneaky jive talker .
And maybe there should be age limits for certain posts . I’m not knocking older age but I’m wondering if enough air was getting to Greenspans brain at his age ,or was it that his crazy idealism from Rand was the undercurrent of his acts ?
Oops! Better get those stock prices back up quickly.
http://finance.yahoo.com/news/Lower-bailout-estimate-apf-2810256430.html?x=0&sec=topStories&pos=8&asset=&ccode=
Lower bailout estimate assumes higher stock prices
The Treasury Department indicated Friday it expects taxpayers will lose billions less from the financial bailouts than earlier estimated. The problem is, its revised forecast assumes Treasury’s shares of bailed-out companies are gaining value despite this week’s plunge in stock prices.
You know what they say when you use the word “assume”
I’m overjoyed the bubble-blind Fed has increased responsibility under the financial overhaul to make sure the economy runs smoothly. This is sure to work well.
Economics
Free exchange
The Fed
Bubble spotting
May 3rd 2010, 19:04 by R.A. | WASHINGTON
THE FED has just released detailed transcripts of its 2004 meetings, and the dialogues within have gotten a lot of blog attention. Annie Lowrey posts a long, frustrating passage in which FOMC members seem incapable of perceiving that the ratio of rents to home prices has moved well out of normal territory. Calculated Risk posts this quote:
I don’t want to leave the impression that we think there’s a huge housing bubble. We believe a lot of the rise in house prices is rooted in fundamentals. But even after you account for the fundamentals, there’s a part of the increase that is hard to explain.
Prompting Matt Yglesias to ask what exactly a bubble might be if not a rise in prices above fundamentals. And Ryan Grim collects several troubling statements. Here’s Chairman Greenspan in March of 2004:
We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand…
Jack Guynn, president of the Atlanta Fed, offered prescient warnings:
[A] number of folks are expressing growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in Florida. Entire condo projects and upscale residential lots are being pre-sold before any construction, with buyers freely admitting that they have no intention of occupying the units or building on the land but rather are counting on ‘flipping’ the properties–selling them quickly at higher prices…
The substantial run-up in house prices, which we have followed in Florida and also see in the populous Northeast and West Coast of the United States, may be at least partially attributable to unusually low mortgage rates influenced by our very accommodative policy…
A number of other FOMC members expressed some concern that prices might be moving above levels that could be considered economically justifiable.
Mr Greenspan’s point is the most interesting one, I think. It comes across as incredibly arrogant and hubristic in the light of hindsight. As it happens, the FOMC did not understand the trouble that was brewing, and to the extent that it did it failed woefully to act the mitigate the potential damage. And it isn’t surprising that the publication of these transcripts have increased the calls for oversight of and transparency at the Fed.
…
In 2004, Fed’s Bernanke made fun of own forecasting
Fri Apr 30, 2010 5:58pm EDT
Related News
By Mark Felsenthal
WASHINGTON, April 30 (Reuters) - As a Federal Reserve governor in 2004, Ben Bernanke, now the U.S. central bank’s chairman, showed humility — and a sense of humor — in acknowledging a missed call about the path of inflation, transcripts released on Friday showed.
Bernanke was slow to acknowledge that inflation, after a long period of calm, was beginning to heat up. He finally threw in the towel at a meeting of the Fed’s policy-setting Federal Open Market Committee in June 2004, citing “rules of forecasting” borrowed from former Fed colleague Laurence Meyer.
“Rule one, stick with your forecast as long as possible,” he said, to laughter. “Rule two, when your forecast becomes untenable, make a new forecast. Rule three, know when to switch from rule one to rule two.”
…
Rule 4: Never let on that it’s all voodoo BS after a certain point.
The Financial Times
Limit Fed chairmen to 10 years
By Richard Posner and Kenneth Posner
Published: May 2 2010 19:39 | Last updated: May 2 2010 19:39
Recently Alan Greenspan has been blamed for cutting interest rates too low, thus fuelling the US housing boom and bust, an assertion he partially acknowledges. Yet he was the “maestro”, America’s most widely respected chairman of the Federal Reserve, during an 18-year term.
A Fed governor has a non-renewable 14-year term; the chairman – who has a four-year renewable term – is also subject to the 14-year limitation. However, a governor can also serve the unexpired portion of his predecessor’s term. Mr Greenspan was appointed in 1987 to fill Paul Volcker’s term, was reappointed in 1992 and was replaced in 2006 by Ben Bernanke.
As we all consider how to avoid future crises, there is a lesson in Mr Greenspan’s legacy: it may be unwise to let Fed chairmen serve for very long periods. A more reasonable term limit would be 10 years (inclusive of prior service), in recognition that the chairman needs a lot of on-the-job learning unless he or she has already been a senior Fed official.
There is a tendency in American politics to impose an institutional solution on an individual problem. Towards the end of Mr Greenspan’s term, he screwed up; therefore, limit Fed chairmen’s terms. But that tendency does not mean term limits are a bad thing. They are common in democracies for government positions of significant power. Because of the tradition of deference by other governors and the open market committee, which sets US interest rates, the Fed chairman is an immensely powerful official with de facto control over trillions of dollars in spending power.
Term limits involve a trade-off: on the one hand, we might lose the occasional exceptional executive; also, term limits might encourage an executive to act strategically near the end of his term to improve chances for a good subsequent job. On the other hand, without term limits, long-standing popularity and prestige may entrench a leader, masking human frailties that gradually erode his or her performance, such as age, fatigue, staleness, complacency, overconfidence, greed or hunger for power – Mr Greenspan may have exhibited some of these pathologies in the latter part of his tenure. History is full of examples of leaders whose long service eventually became counterproductive, such as J. Edgar Hoover at the FBI. (There are also exceptions, such as Robert Morgenthau, New York County district attorney for 34 years.)
Another problem with long-tenured leaders is that they may get stuck in a strategic rut, keeping strategies that have worked in the past, even though conditions have changed. This is a common challenge: chief executives of successful companies fail to change course when needed, intelligence agencies miss new trends, investors stick with a certain style too long. For Mr Greenspan, cutting rates to avert crisis was an effective strategy during the recession of 1991 and the global currency crisis of 1998. Lowering rates after the internet bust seemed logical, but keeping them so low for so long was a mistake. Rotating leadership positions is a way to bring in a fresh set of eyes, facilitating change.
The Fed faces unique risks from long-standing leadership, because the market not only reacts to policy decisions but anticipates its next steps. Mr Greenspan’s successes led to widespread confidence in the Fed’s power to forestall an economic collapse, consequent on a bubble, through interest rate cuts – the Fed’s commitment to protect asset prices in this way came to be called the “Greenspan put”. If too many people in the markets predict the same outcome (in this instance by relying on Mr Greenspan) and then are proved wrong, the day of reckoning will be painful, as we have just experienced. More frequent rotation of the chairman’s position would help prevent excessive confidence in a single strategy or personality. Market participants would be less certain that they could predict the actions of a new chairman. A dose of uncertainty might encourage companies to hold more capital and take less risk.
…
Risk taking companies are great for the economy, so long as those which make bad debts and lose are enabled to face the consequences of their financial folly.
“…chief executives of successful companies fail to change course when needed”
Cue:
Blockbuster,…AOL,…Kodak,…
Risk taking is good ,if it’s not money that can take down the entire financial systems . There always needs to be a place for risk-taking ,but not on a massive scale like taking over the residential real estate markets and creating a Ponzi scheme of fake prices by faulty lending and demand . Thats not risk taking to produce a productive end ,but rather that is a Ponzi -scheme .
Paul Krugman
May 3, 2010, 3:51 pm
Bubble Denial
Via Ryan Grim and Matthew Yglesias, some seriously disturbing Fed transcripts. Basically, back in 2004 staff members presented data seriously suggesting a housing bubble; not only were the data disregarded, Greenspan wanted no hint of the discussion made public:
We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.
Can’t have outsiders joining in on the debate, can we? Hoo boy.
A technical note: those charts would have been even more striking if the staffers had differentiated by regions; big contrast between Flatland and the Zoned Zone, with the latter much more clearly in a bubble.
“…We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand.”
I’ll wager Sir Greenisspent, down in some hidden node of his vast grey-matter… there is a part of him that truly believes in: “Creative Design”
“We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully
understandmanipulate.”We have a winner.
Lets prep the public for bidding wars:
http://www.ny1.com/content/ny1_living/116782/preparedness-key-for-winning-a-bidding-war–expert-says
“never let something go when you would have paid $5,000 more”
Spoken like a true realturd!
Sickening…
Would you take any advise from those two braindead, skill-less morons in that video?
I wouldn’t take a cue from any braindead skill-less moron better known as a realtor. Fawkin losers.
“Make it personal,” she says. “If you have seen 20 homes and this is the one you love, make it known. I think it’s really important to say, ‘this is the one I can see myself living in. I love the fire place, love the view, love the building.’ Whatever it is that made you want this home should be relayed in the offer.”
Do they still teach poker in those private “Fairmont” elementary schools?
This is too funny.
This works really well for car buying too. Tell the car salesman that you are in love with the car. Really gives the buyer that certain edge in negotiations.
Message to politicians from Megabank, Inc: “Don’t rein in our casino gambling activities, or we will crash the markets, financially engineer bad economic weather and blame it on your meddling.”
The Financial Times
Risk appetite among investors evaporates
By Dave Shellock
Published: May 21 2010 22:41 | Last updated: May 21 2010 22:41
A dramatic deterioration in investor confidence triggered across-the-board risk reduction and a flight to safety this week, as fears rose that policy responses to Europe’s sovereign debt crisis could undermine the global recovery.
“Sovereign risk has polluted the government bond market, the corporate debt market, the equity market and, finally, the currency markets,” said Philip Isherwood at Evolution Securities. “The result has been a collapse in risk appetite and a collapse in risk assets.”
A hammer blow to confidence came from Germany’s unilateral, and totally unexpected, ban on naked short-selling of certain securities, which left investors both fearful at the air of panic conveyed by the move and dismayed at the lack of co-ordination with other policymakers.
Subsequent comments by German officials alluding to “war” between politicians and markets, plus US Senate approval of a financial regulation package, served to heighten a sense of siege mentality among investors.
“The weapons brandished are taxes, regulations, investigations and lawsuits,” said Marco Annunziata, chief economist at UniCredit. “Investors are retreating and their fear translates to rising risk aversion. All this might result in tighter credit conditions and a setback to the global recovery.”
…
‘Smell of fear’ pervades huge sell-off - May-21
Long view: Bad guys who are running short of friends - May-21
On London: Reasons to be cheerful - May-21
On Wall St: Joys of anonymous trading - May-21
Anyone up for a game of Pac-Man. It’s his 30th anniversary. Go to http://www.google.com.
Click Insert Coin twice.
Have fun.
Why wouldn’t lender want to make loans in a falling knife asset market? I can’t imagine why…
The Financial Times
Warning over risk of cuts in US lending
By James Politi in Washington
Published: May 21 2010 02:25 | Last updated: May 21 2010 02:25
US banks could “pull back on their lending” as they did at the height of the 2008 financial crisis because of troubles in the eurozone, a senior Federal Reserve official warned on Thursday.
Dan Tarullo, a Fed governor, cited figures showing that US exposure to troubled European countries at the 10 large banks holding the debt amounted to about $60bn, or only 9 per cent of tier one capital.
But he added: “If sovereign problems in peripheral Europe were to spill over to cause difficulties more broadly throughout Europe, US banks would face larger losses on their considerable overall credit exposures, as the value of traded assets declined and loan delinquencies mounted.” Financial market stress could also have an impact on the behaviour of US banks, which “might be forced to pull back on their lending, as they did during the period of severe financial market dysfunction that followed the bankruptcy of Lehman Brothers”, Mr Tarullo told two subcommittees in the House of Representatives.
He added: “Although we view such a development as unlikely, the swoon in global financial markets earlier this month suggests that it is not out of the question.”
Mr Tarullo’s comments marked the most expansive discussion yet by a senior Fed official of the implications of the eurozone crisis for the US economy.
He described the turmoil across the Atlantic as a “potentially serious setback” for the US recovery and noted that the timing of any moves by banks to curb lending would be “unfortunate” given that they had only just started to loosen credit again.
…
EDITOR’S CHOICE
Lex: The double-dip threat - May-20
Merkel urges ‘honest’ regulation advice - May-20
Samuel Brittan: Now is the time to ask: ‘What crisis?’ - May-20
Romano Prodi: Big step towards fiscal federalism - May-20
In depth: Euro in crisis - May-11
The Fed keeps discussing the “monetary policy” conundrum of how to unload toxic MBS, which I find highly confusing. What does printing money and using it to prop up asset prices have to do with monetary policy?
The New York Times
Legal
Federal Reserve Ponders a Plan for Asset Sales
May 20, 2010, 2:14 am
The Federal Reserve indicated that it would wait until after it started raising interest rates before selling the huge store of assets that it acquired in response to the financial crisis. The goal would be to gradually complete the sales about five years after they begin, Sewell Chan writes in The New York Times.
While that strategy is not yet definitive, it is preferred by a majority within the Federal Open Market Committee, the Fed’s policy-making arm, according to minutes released Wednesday from the committee’s most recent meeting, on April 27 and 28.
But the minutes also revealed disagreements over when the sales should begin and how quickly the assets should be sold.
According to the minutes, a minority on the committee preferred announcing a schedule for asset sales, without necessarily waiting for the Fed to raise interest rates. A few wanted to start sales “relatively soon.”
Most committee members seemed to think that the sales should start slowly, but increase gradually to let the markets adjust. But a few thought that the sales could be completed over three years, and that “a relatively brisk pace of sales” would reduce the risk of inflation expectations being set off.
For now, the committee did not make any decisions, agreeing that the Federal Reserve Bank of New York, which conducts the Fed’s open market operations, should continue its current practice of rolling over Treasury securities as they mature and of allowing the Fannie Mae and Freddie Mac debt to mature and the mortgage bonds to be prepaid over time.
If that practice were to continue without any change in policy, it could take decades for the Fed’s balance sheet to return to normal.
The Fed more than doubled its balance sheet, to about $2.3 trillion, since the start of the crisis. It acquired mortgage-backed securities, debts owed to Fannie Mae and Freddie Mac and longer-term Treasury securities in an effort to hold down long-term interest rates. To buy those assets, it used its power to print money to create a large pool of bank reserves.
A foremost monetary policy concern at the Fed has been how to deal with the bloated balance sheet — and the related question of how to drain reserves so that they are not available for banks to lend too quickly, which would expand the money supply.
…
I am posting real late at night ,or in the morning . I just don’t know why people aren’t insulted when people who belong in jail think they should
have the say-so in financial reform . As a young person I pictured all kind of
future events that could happen in this Country ,but I never pictured
such a bizarre twist as this one .
http://www.marketwatch.com/story/obama-complacent-regulators-played-oil-spill-role-2010-05-22
More Obama bluster and “outrage” over another yet another failure on his watch. Another commission appointed, and another costly investigation that will issue the standard CYA “mistakes were made” exculpatory bullshit and call for new layers of bureaucracy and regulation while refusing to hold anyone responsible or accountable for said mistakes. Other than to blame Bush. This is getting so sickeningly predictable.