Bits Bucket For May 30, 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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What incredible condozes right next to train track….but they have a moat you need to cross over to get into the building….such luzzyrie:
http://ny.curbed.com/archives/2010/05/27/murano_lics_odd_new_light_show_building_hits_the_market.php
Don’t judge it too harshly, base prices for a low level unit are slightly less than $700 psf. What do you expect for so little?
No kidding. For $700 a square foot you really can’t be too choosy. With prices that low it’s almost stupid not to snap one up. I think I will risk looking stupid.
I know one couple that won’t be buying one. A moat? WTF?
So you and your right hand won’t be buying.
What about your wife?
Glass. Next to a rail yard.
Ye… ah.
“The message has been heard: Deep cuts are now necessary,” says Josef Kaesmeier, chief economist of the private bank Merck Finck. Even if Spain or Greece were to slip into recession due to drastic austerity measures, there is no alternative to their course of action, Kaesmeier says.
The economist sees much bigger problems outside the euro zone. “I’m worried about what’s happening in the UK and the US,” he says. “The Americans say: The dollar is the global currency, and we’ll happily keep on printing money. Instead of cutting spending, they are simply passing one economic stimulus package after the other.”
< The troubled Europeans know they have to tighten their belts and put up with austerity if they are going to rescue the euro from collapse.
~ Americans are not interested in such inconvenience. After all, the U.S. is king of the hill…its currency is the basis for business transactions all over the world. If it’s in short supply we’ll just print as much as necessary to keep up our customary lifestyle.
BUT - being the mightiest nation on earth may not be a permanent condition for the United States if the people remain blind to the consequences of soaring debt and irredeemable fiat money. Time is running out.
“~ Americans are not interested in such inconvenience.”
If you want your faith in humanity destroyed beyond repair then just head to the K-Mart in Penn Station on a Saturday night. I did just that last night. I had to pick up a couple things. I go there once in a while.
It is horrifying to walk around the store. You see little kids that appear to have the brain capacity of a common yard snail. The parents are land whales that waddle around with rolls of blubber hanging off at all angles. The tattooed and pierced crowd, with their pants hanging low to show their underwear, try to look and act tough. The employees are unable to do simple math and unwilling to be friendly.
I look at the consumption going on by people who, for a large part, do nothing positive in their lives or the lives of the people they touch. They produce nothing. They expect nothing from themselves but they expect the world from society. The standard of living for those “average Americans” is so far above anything that they earn that the distance this whole charade can crash is almost mind boggling. When so much of society is nothing more than $hit factories then society balances precariously. And all our government can worry about is giving these people even more unearned benefits and making sure that we can live in a world free from reasonably priced houses. Disaster awaits that nation that can’t be inconvenienced.
Disaster awaits that nation that can’t be inconvenienced.
Nicely put.
But after a generation or two of this, when the time comes they will be too lazy to revolt.
We have a winner.
Thankfully none of them can read or would be interested in this blog or your fornt yard could end up looking like night of the obese zombies as they come for you.
I can read. I weigh too much.
It’s easy to tell when pukes think that my weight = stupid. All the suits at my former employer were like that. But they are currently on the street, because the deal they made in 2007 that would (and I quote) “…….keep us profitable for the next 30 years, no matter what the economy does.).
At least I’m still working…..my fact, this could be my best year ever. Unless the economy blows up again.
This country has GOT to get off the corn-based diet and start eating real food again. However, I don’t see how this is going to happen. Real food takes a lot of time and energy and expense to prepare, while corn/wheat based stuff is non-perishable and honestly it tastes better in the evolutionary sense. Eliminating the corn subsidy* will probably not help, since it just means that all food will cost the same — too much — and people will choose the sugar anyway.
———-
*unlikely, since every Presidential candidate has to please the state of Iowa.
“I look at the consumption going on by people who, for a large part, do nothing positive in their lives or the lives of the people they touch. They produce nothing. They expect nothing from themselves but they expect the world from society.”
Bravo nycityboy you have defined the problem we face.
So you saying these folks are big obama supporters?
They are the REAL Republican base. Racist, homophobic, entitlement driven rednecks.
“I look at the consumption going on by people who, for a large part, do nothing positive in their lives or the lives of the people they touch. They produce nothing. They expect nothing from themselves but they expect the world from society.”
How can you tell by looking at strangers in a store that they do nothing positive at all? What sort of positive things do you think that they should be doing?
Meet me at the K-Mart at Penn Station and then ask the question.
Mike, it’s not just looking, but “observing” as well. (you know, basic science)
How do they act? What are they saying? What are they purchasing? And for appearance, dress really DOES say a lot about a person.
Well I don’t dress that great but at least I don’t have to lean on the cart.
+1 Thar ya go.
nycityboy, although I stick up for J6P all the time, I have to say that I have no illusions and find your description so true as to be sad.
And while I often blame the PTB for doing their damnedest to destroy the middle class and create a larger permanent underclass, I also see far too many people who don’t to even TRY and better themselves. And why should they when they know the game is rigged? Altruism? Those idiots can’t even spell the damn word.
But I stick up for J6P because history shows that too large an underclass creates the kind of dissatisfaction that leads to messy, messy upheavals. The kind that sane people really, really don’t want to see. The kind that the PTB always thinks they have contained…. and find out they don’t.
I know what you are saying NYCB. At the Walmart in Barstow Cal, it is like a freak show at the circus.
Mrs. SD Renter and I were asked to leave for having too many teeth.
I think I just hurt myself laughing!
Europe will become more capitalist than the U.S. In a few years, but eventually we will undergo austerity measures ourselves (significant and real cuts in government laws, size, spending red tape, and government jobs and benefits). later than that we will get tax cuts. America will come back.
One can only hope this will be the case Bill…
I agree … the comeback will be very painful to those who feel entitled to the basic human rights defined by them as food, shelter, water, iphones, earings, tatoos, cigarettes, etc.
I’m seeing which way the wind is blowing today and it looks deflationary.
The comeback will be painful for the responsible savers as well, except for those with millions of bucks in federal tax free funds such as VMLTX and a modest paid off house in a tax free state such as Wyoming. We will have higher income taxes and very slow growth. Some of the lucky ones (in tax free funds) will take subsistence jobs just to keep active and live comfortably.
In the 30s, there was a birth dearth because no one could afford kids. There will be another significant drop in births the next ten years (except among illegal aliens if we still allow responsible citizens to pay for the illegals’ upkeep).
Unemployment will remain high (above ten percent) for the next few years as business costs will be too high for hiring. Credit usage will drop significantly. There will be a return to layaways for purchases.
House prices will probably continue to drop the next ten years since all the macro economics will have an effect on making home ownership less affordable than renting.
The dollar will strengthen eventually and gold spot will probably drop to $600 per ounce. Monetary inflation will continue the next ten years and then price inflation will kick in for items we want . Measured gold bullion buying periodically will be a good idea, but cash will probably be king for the next ten years.
The dollar will strengthen eventually and gold spot will probably drop to $600 per ounce. Monetary inflation will continue the next ten years and then price inflation will kick in for items we want . Measured gold bullion buying periodically will be a good idea, but cash will probably be king for the next ten years.
I’ll take the other side of that bet.
Oh wait, I already have…
Europe will become more capitalist than the U.S. In a few years, but eventually we will undergo austerity measures ourselves (significant and real cuts in government laws, size, spending red tape, and government jobs and benefits). later than that we will get tax cuts. America will come back.
Bill
1. You must not read history much if you think that poverty leads to a more capitalistic government.
2. Austerity measures do not mean capitalism. Call me when they eliminate food stamps and privatize healthcare. Austerity in these countries and eventually ours will be massive cuts in services for the middle class and upper middle class. Increased taxes on the middle and uppermiddle class. Continued wealth preservation for the elite, and continued food stamps for the poor. Without food stamps the poor will riot. Without the elite the politician doesn’t get handouts.
It is rather obvious that BIll doesn’t know much history.
only because I do not have your Marxist interpretation of history.
+1, Bill
Wonder if they’ll hang Fred Reed for an opinion like this?
“The US will sooner or later will have to entertain the idea of getting over Latin immigration. Allowing the immigration in the first place was a terrible idea, since diversity regularly proves disastrous, but now there is precious little to be done about it. Nativist fantasies notwithstanding, the US is not going to round up thirteen (give or take) million people at gunpoint and force them across the border. If it doesn’t do this, few ilegals will leave.”
~ A Different Take.
Pirates threaten boats on US-Mexico border lake.
ZAPATA, Texas (AP) - The waters of Falcon Lake normally beckon boaters with waterskiing and world-record bass fishing. But this holiday weekend, fishermen on the waters that straddle the U.S.-Mexico border are on the lookout for something more sinister: pirates.
Twice in recent weeks, fishermen have been robbed at gunpoint by marauders that the local sheriff says are “spillover” from fighting between rival Mexican drug gangs.
Boaters are concerned about their safety, and the president of the local Chamber of Commerce is trying to assure people that everything’s fine on the U.S. side of the lake.
At the fishing camp his family has owned for 50 years, Jack Cox now sleeps with a loaded shotgun at his feet and a handgun within reach.
In the American waters, Cox said, “you’re safer, but you’re not safe.” Mexican commercial fishermen regularly cross to set their nets illegally, why wouldn’t gunmen do the same? he asked.
My sister lives in the metro Dallas area and says she is afraid to go the mall as it’s overrun with gang bangers. One time she was at the food court whena fight broke out and that a flying chair almost hit her little boy. It’s been a few years since I’ve been to visit her, but I recall it seemed like a scary place back then.
When it gets bad enough private malls will pop up, where you have to buy a membership.
Just eliminate the automatic citizenship for your baby, if you are here illegally, would be a no-brainer, it would not racist, or specifically targeted to any one group and would apply to everyone. Rand Paul basically said that.
I think someone filed a bill recently. The whole idea is to get the matter in front of the Supreme Court and clarify the 14th amendment, which is decidedly murky. There’s a good argument to be made that children of illegals are not, in fact, automatically American citizens.
As a practical matter, it is unworkable, unless you want to become India or China or some seething, overpopulated third world country. The whole issue is ridiculous, if you take it to the nth degree, does everyone anywhere on the planet have a right to live here and be an American citizen? Or, shall we just make the entire planet America? Lord knows, TPTB have been trying.
I was just watching some program on the teevee and the cost in benefits to legalize all those illegally in the country would be some ridiculous trillions of dollars. So it is just not economically feasible.
Amnesty never gonna happen. I think the light has dawned that we just can’t afford it.
I’ve been slapping my thighs over Obama’s little performance with Calderon. First, he allows Calderon to lecture the American people, which is his way of twitting a people he despises with a carefully masked hatred. But, as soon as Calderon moves on, he orders a bunch of National Guard to the border. So he gets to twit Calderon, too. Clearly, Calderon was taken off guard by this.
I also notice Luis Gutierrez has toned his rhetoric WAY down after being arrested in front of the White House. I don’t think it was because of the arrest, though. My guess is that Rahm had a little talk with him, sort of a reality check.
Unfortunately, the first sentence of the amendment is pretty clear:
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.
A constitutional amendment is probably necessary. Though it’s a big pain in the neck, it can be done.
“subject to the jurisdiction thereof”
There’s that pesky word “jurisdiction”. They are NOT subject to the jurisdiction of the US, just ask them, they’ll be happy to tell you.
I like this. Basically if your parents were here illegally. Too bad, you have to go.
‘the US is not going to round up thirteen (give or take) million people at gunpoint and force them across the border’
So who’s proposing that?
I am. And planning on using land mines to secure the border, along with forcing a one mile “dead zone” on the Mexican side.
After a few gun point drop offs in Southern Mexico, would be willing to allow them an orderly withdrawal from the US.
Otherwise internment camps in southern Arizona. Then deportation.
How does the ‘dead zone’ work? I think there might be some towns in the way.
About the towns….
Not after we get through with them Alpha.
Sure we can push them back to a reasonable 1 mile distance.
Heck we can even have machine guns on remote controls with cameras. Cheaper than guards. Nice 105mm with a 50 cal. Have guys work in nice air conditioned offices pick people off trying to negotiate the minefield.
And this is the America you want to live in?
/s - ?
Sammy,
You guys act like this is something new or hasn’t happened here before. This is the Old US of A. Land of the free. Free from most restraint.
You want to talk about interment camps, plenty of Japanese American’s will talk to you plenty.
You want to talk about forced relocation’s? Talk to American Indian’s or the Creole or a good number of black people.
Things come back again. This isn’t new. Just like our socialist buddies.
Much like our pension discussions where states were allowed to run up massive obligations and now piss and moan about paying. Where the F*&K was everyone when the agreement was first made? How about more than a decade ago when it was clear it was a mess?
Same thing with all the illegals. Now we are in the situation where a lot of people are going to get in a huff about our civil rights. Civil rights are just another illusion and entitlement.
http://www.huffingtonpost.com/2010/04/26/mia-releases-graphic-expl_n_552486.html
James,
Internment camps and ethnic cleansing? That’s a very dark road you would have us go down. Think very hard about what you wish for. Some unholy genies cannot be put back into the bottle.
WARNING: Explicit and graphic M.I.A. video “Born Free.”
I am. And planning on using land mines to secure the border, along with forcing a one mile “dead zone” on the Mexican side.
And you think that would only be used to keep people out? That’s pretty naive, don’t you think?
the alternative will work better: no tax subsidies to any of the illegals or their children. Make the Catholic church do that job. Make them pay their way 100%.
You’d be surprised at the number of Mexican illegals that convert to Protestantism, Pentecostalism in particular, in the US. And those who are Catholic aren’t all that pious or observant wither.
In Peru, the Pentecostal highland indians formed the Rondas Campesinas - peasant militias - that ultimately defeated the ultra-radical and nihilist Shining Path guerilla movement. The Catholic church, by contrast, played its usual role of promising the peasants pie-in-the-sky-when-you-die, while supporting the corrupt kleptocracy whose misrule gave rise to the insurgency.
In Mexico the Pentecostals support the left of center PRI and PRD.
as a catholic… huh me? I only go to church when i get paid for it…like videotaping a wedding…I agree let the religious crowd pay for their upkeep.
Judging from the volume of illegals in So Ca alone (let alone the whole state) I would lean towards FAIR’s 30M+ illegals in the U.S. Even my sil in Kansas is complaining about them.
My family has had nothing but trouble with immigrants ever since we came to this country.
:->
=D>
:d
Who knows? Strange things have happened in the course of history.
Article was interesting, though. Based upon his musings, amnesty is the last thing the depraved globalistas would want, if they’re trying to engineer a worker race. Keeping the illegals in their current states keeps the wages depressed. But I’m sure it amuses them to rile the people with it, and keep them fighting amongst themselves. Illegal immigration followed by amensty is incompatible with a welfare state.
Bwahahaha, amnesty will be granted when there’s no more benefits left, no Medicare, no Medicaid, no aid to dependent children, no Social Security, no nuthin’. And at that point, who will want it? Back to Mayheeco. Or wherever.
First of it’s 20 million not 13.
Second, no need to round up anyone. The govt has to stop the employers from hiring. Once the illegals have no work, most will self deport.
This “we can’t deport millions of people” argument is the the reddest of red herrings out there.
Wow, is it that many?
My more palatable piece of legislation would make hiring off the street illegal.
My brother in the Border Patrol says the border crossers are way down, compared to 2 years ago. Most of the traffic now is drug related.
I can only contrast the Vietnamese I know who came here 30 years ago, vs. the current crop of Mexican/Central American illegals. One of the first things they did was “Americanize” their kid’s names. A small gesture, but one that said volumes.
The current crop of illegals “business plan” seems to be: bring in the extended family, start a business where they can undercut the locals on price with their cheap family labor, screw their vendors and not pay taxes. Don’t have anything the government/creditors can seize for non-payment, just pack up the troupe and GTFOO Dodge.
When I first saw that acronym I thought that it was the name of a new car model. Pontiac had the GTO, so now Dodge will have a GTFOO.
Pontiac had the GTO, so now Dodge will have a GTFOO.
Nice. I’m going to look for someplace to use that eventually.
+1
One of the rare times when I agree with you.
Self deportation is already happening, thanks to the dearth of jobs. My sister is a bilingual teacher and she was told firsthand by many families that they were going back to Mexico. She has fewer students this year. Also in her state they started cracking down on welfare for illegals.
The freebies compliment there tax free to low tax wages. Some of my current neighbors are driving pretty nice SUV’s and are eating take out from P F Chang, and they don’t work there. Free money, food, medical, education, translation to Spanish, etc…
Dude — I failed to follow your mid-week suggestion last week to buy stocks, and missed the mini-crash on Friday. Is it still a good time to buy now?
It is already illegal for businesses to hire illegals, EXCEPT if you are a private individual for a day labor gig - at least that’s what I heard.
Oops - this is in Arizona.
I think many germans felt the same way in 1930.
Never underestimate what a good economic depression will do to the atitudes of a civilized society…
“Never underestimate what a good economic depression will do to the atitudes of a civilized society…”
My god, I actually agree with you on something!
http://www.larouchepub.com/other/2010/3721cartel_kill_gl-st.html
Treasonous Banking Cartel Ordered Glass-Steagall Repeal
by John Hoefle
May 22—The death of the Glass-Steagall regulatory safeguard in 1999 was a disaster, not only for the United States, but also for the rest of the world. This vital restriction on speculative activities, put through in 1933, though weakened significantly over the years by deregulation zealots, remained a major legal impediment, until its final demise at the hands of the ill-conceived and corrupt Gramm-Leach-Bliley Act of 1999.
Freed from the prohibition against mixing commercial banking and investment banking, the largest U.S. banks turned more and more to Wall Street speculation. To “make money” the fastest and the mostest, they abandoned investment in the physical economy, especially those substantial projects which require decades to “pay off,” not only for them, but for the population as a whole. They turned increasingly toward using their depositors’ money to fund gambling sprees in the global casino, using their growing power to manipulate markets, looting both their own customers, and the rest of society. They became the personification of greed; and that greed, unchecked by regulatory safeguards, destroyed our economy.
Much of this can be laid at the feet of the Anglo-Dutch Liberal system, which dominates the international financial system from its headquarters in the City of London. Wall Street and the big U.S. banks, be they in New York, North Carolina, or California, are creatures of this global system, and their nefarious activities can only be understood in this regard. They are more British than American, in method and aims.
However richly the Brutish Empire deserves the blame for the disaster which has enveloped the world, the American people and their government bear the ultimate responsibility for what has happened here. Under our Constitution, it is the duty of the Federal government to protect the nation from predators, and it is the duty of the citizenry to make sure that governments, at all levels, meet their responsibilities. If our people had not allowed themselves to be corrupted, we would not have elected such fools as Phil Gramm, Chris Dodd, Barney Frank, and Nancy Pelosi to represent us in Congress, nor would we have tolerated such creatures as Sir Alan Greenspan and Ben Bernanke running our monetary affairs.
The tide is turning, however. We, the people, have awakened from our stupor and are demanding that our government reverse decades of failed policies. The battle to restore Glass-Steagall is exemplary of this process. The battle has been joined, and the possibility of victory is on the horizon.
As recent events in the Senate show, the need to restore Glass-Steagall and to reign in derivatives has now become part of the national debate—a debate we will win. Let the bankers and their flunkies howl—it’s a sign we’re doing the right thing. Stick to your principles, and do not compromise. We demand a return to Glass-Steagall and the complete elimination of derivatives, and we will prevail.
However richly the Brutish Empire deserves the blame for the disaster which has enveloped the world, the American people and their government bear the ultimate responsibility for what has happened here. Under our Constitution, it is the duty of the Federal government to protect the nation from predators, and it is the duty of the citizenry to make sure that governments, at all levels, meet their responsibilities. If our people had not allowed themselves to be corrupted, we would not have elected such fools as Phil Gramm, Chris Dodd, Barney Frank, and Nancy Pelosi to represent us in Congress, nor would we have tolerated such creatures as Sir Alan Greenspan and Ben Bernanke running our monetary affairs.
Truer words were never spoken.
the need to restore Glass-Steagall and to reign in derivatives has now become part of the national debate—a debate we will win.
No, there is a need to repeal Glass-Steagall COMPLETELY. Glass-Steagall is composed of TWO PARTS. The first part– the creation of the FDIC– brought about a huge potential risk to taxpayers, setting the stage for systemic risk, TBTF, and bailouts. The second part– the separation of commercial and investment banking– attempted to limit that risk.
Gramm-Leach-Bliley kept the provisions that created the risk, and repealed the ones that tried to control it. If it had repealed the ENTIRE Glass-Steagall Act, it would have been a real case of deregulation, and at least there would have been one less argument for bailing out the banks.
Why is this so hard to understand?
Divide and conquer is still alive and well
Abortion
Burning the Flag
Prayer in school
Gay marriage
etc etc
You left out…
Welfare (for the poor= bad. for the rich=good)
Pensions (for the poor=bad. for the rich=good)
Health care (for the poor=bad. for the rich =good)
And still the number one divider and world champeen:
Racism.
http://www.larouchepub.com/pr/2010/100526germany_vs_short_sales.html
Germany Moves Against British Empire, Plans To Forbid All Naked Short Sales
May 26, 2010 (EIRNS)—German Finance Minister Wolfgang Schäuble yesterday presented a “discussion draft” on the prohibition of all naked short sales in Germany, which was sent out to banks and economic groups. This public pre-announcement is quite unusual, and seems to be designed to create a favorable public mood for government measures — in particular, since Geithner is descending on Germany now.
Tomorrow there will be a hearing of experts, and the German cabinet will take up the matter on June 2nd. The aim of the new law is “to prohibit any transactions which could threaten the stability of the financial markets.” The measure will forbid all naked short sales of state bonds and of all stocks and their derivatives traded in Germany, not just ten bank stocks as is the case now. Moreover, a two-tier “transparency system on short sales positions” will be introduced. In the first phase, BaFin (the Federal Financial Supervisory Authority) must be informed, and in the second stage, higher volume short sales have to be made public. Also, the asset trading law (Wertpapierhandelsgesetz) will prohibit unsecured CDS on EU countries’ debt, and currency derivatives on the euro, if they do not serve real deals, which have to be secured.
The text of the draft paper says: It is forbidden to execute unsecured short sales in stocks or debt titles, which have been issued by central governments, regional governments and local governments of those EU member-states which use the euro as legal currency, and which have been admitted to national trade [in Germany] in the regulated market and introduced into trade.
This comes after German Economics Minister Brüderle, yesterday, rejected EU President’s Van Rompuy’s plans to issue joint eurobonds. Brüderle said this would set the wrong incentives; Germany would not support ideas for turning the Eurozone into a transfer union. Of course, this is what in fact happened last week when the Bundestag agreed to the euro rescue package, which the government had agreed upon after massive pressure from the EU level.
Very convenient in this respect is the public and institutional pressure building upon EU Commission President Jose Manuel Barroso, for his close personal ties to Spiros Latsis of Eurobank, who received probably the biggest single EU bailout for government bonds in the Greek “rescue package.”
While still far from the Glass-Steagall reform needed for the whole system, the German steps go in the right direction, as Helga Zepp-LaRouche pointed out in her most recent statements, in which she also noted the growing press chorus (as in the Franfurter Allgemeine Zeitung most particularly) for Germany to quit the euro and go back to the Deutschmark, including blasting the “Political Euro Cartel.”
The pace-setter for this change in Germany clearly has been the BüSo campaign for a return to the Deutschmark and to global Glass-Steagall measures, which over the course of the final week of the recent North Rhein Westphalia state election campaign was escalated sharply with a 100,000 leaflet distribution on the subject. More responses are anticipated.
Louisiana is such a beautiful state. I drove from Austin to New Orleans, and I was amazed by the beauty of the scenery. However, I do not understand why this state is so poor. They are so rich in water and oil, two of the most sought-after items in this world, and they are still kinda the armpit of the US along w Mississippi.
“However, I do not understand why this state is so poor.”
It’s a Good O’l Boy state. The Rule of Law ranks in second place.
One of the most legendarily corrupt states ever.
That’s why.
I’ll second the motion. They got scams for working scams.
It’s the Mexico of the United States.
Course, it is a swamp.
Think of Louisianna as a canary in the coal mine indicator for where a corrupt crony capitalistic system will lead the entire U.S.A. in a few more years…
The curse of resource wealth.
Isn’t Nigeria rich in oil? Ever see pictures of that place?
2 words - unions and democrats.
Louisiana and unions should never be in the same sentence. It’s non-union central.
Ok…. which one of you retards are rightfully hiding behind the username Juan?
I am from Louisiana and currently live in N. East Louisiana. Corruption does exist but it is no longer the primary driver in La. politics. The trial and sentencing of The Guv’nor, Edwin W. Edwards for his “activities” is an example. Things are changing in this state.
IMHO, Louisiana has a better view on life than most other states I have been to and lived in. We like to live. We are not compelled to be like the rest of America or the world. We don’t see other people in other cities and countries living their lives very well. Mostly we see unbridled greed, avarice, and placing work and acquisition of possessions above all. In the past, I’ve done work that compelled me to work 12 hour days, holidays, weekends,… I made a lot of money. I should not have done that. It wasn’t worth the money.
We work hard in Louisiana. Very hard. We do not fail to live, though. Look we get there, we do. We’ll have some fun along the way.
I should add that Florida once came close to Louisiana’s attitude. Then came the housing boom. So, how did all of that work out?
Still, we have problems with education and opportunity. Education seems to be disconnected with employment opportunity. Many are underemployed. That will need to change.
Others will see this differently.
Roidy
BTW, I am mortified at BP and the oil spill. As far as I am concerned, the spill is a direct result of a lack of hard headed planning and engineering. I think my wonderful times fishing at the drill rigs, Vermilion bay, Barataria, Hopedale, Shell Beach, Grand Ilse are all done. My vacations to the beaches of Florida are also finished. All because of a corporate system that will insist the “glass as half full.” Get this: Physics says that if something can happen it will. This should be taught in business schools, engineering schools, and science class.
“I think my wonderful times fishing at the drill rigs, Vermilion bay, Barataria, Hopedale, Shell Beach, Grand Ilse are all done. My vacations to the beaches of Florida are also finished.”
I am afraid you’re right. I used to work as a contractor on offshore drilling rigs, and I can assure you that there is no known way to clean up a large spill. All of the booms and boats are there for show, but they don’t really do much of anything as far as cleaning up the mess. Once you dump tens of millions of gallons ( soon to be hundreds of millions ) in the ocean, you can’t just mop it up. The area is just too vast and stormy, and trying to mop oil off water is ridiculously ineffective even in the best of conditions. And the stuff is not going to magically vanish in a year or two as one of the more ignorant posters on HBB stated recently ( he was urging people to buy beach front property on the cheap and sell it after the oil vanishes by next year ).
“And the stuff is not going to magically vanish in a year or two as one of the more ignorant posters on HBB stated recently ( he was urging people to buy beach front property on the cheap and sell it after the oil vanishes by next year ).”
Totally clueless posters. The Gulf is going to be as dead as the Salton Sea, except there’ll be tar balls dotting the beaches. There should be no rush to buy any beach front property on the Gulf now. There’ll be a glut for decades to come, and dirt cheap too. Anyone buying now won’t live long enough for the Gulf to return to its previous state.
Hmm, you mean people really think that this will be done in a year?
Roidy
Oh no the end of the world is here (again) due to the BP spill.
What most of your hysteria driven posters don’t know is that in 1979 there was a spill in the Gulf that last 9 months. Yes 9 months before the oil stopped hushing. And yet growing up in the 80s, every winter I would go down to FL for a week on the beach in St Pete.
In a year or two nobody will even remember this happened.
Perspective people.
My take is that initially, the US guv thought they could collect taxes from the illegals and not have to pay out any bennies since after all they are illegals and not entitled to any citizen benefits. But guess what …they thought wrongl.
“My take is that initially, the US guv thought …”
Stop right there and think about what you are saying.
Oh F*CK!!! Guilty as charged. I am guilty of an oxymoron.
I beg to differ. By definition, someone here illegally is a criminal. Why would an illegal file a tax form, since it requires enough personal information for ICE to locate them?
Because they know the ICE can’t be bothered. I see tax prep shops with signs in the window in Spanish sayin that they will get an ITIN # for you. Why leave that EIC on the table, right?
‘Why would an illegal file a tax form’
A few years back, I considered doing some tax work one spring. (I ended up not doing it, mainly cuz I don’t like carrying water for the IRS). I had to take a refresher test, and was shown that there is an entire system designed for IA’s to file income tax returns, with TINs, etc. Why would they file? IMO, to get tax refunds, to collect EICs and document their residency for possible future amnesties.
“…was shown that there is an entire system designed for IA’s to file income tax returns, with TINs, etc.”
There was also a great system in place a couple of years back to help them obtain financing to purchase homes they could not afford (liar loans, low-doc, no-doc, etc). Whatever became of it?
The latest from Matt Taibbi. To the lobotomized morons who continue to sling partisan political BS, here is proof - as if more were needed - that BOTH parties are completely corrupt, wholly owned subsidiaries of Wall Street. Matt dares to investigate Wall Street in a way the corporate-owned MSM will never do - gotta keep us up to date on Lindsey Lohan’s latest antics instead. Matt’s articles are must-read information for anyone seeking to understand the full extend of the banksters’ subversion of Capital Hill.
http://www.rollingstone.com/politics/news/;kw=36899,157778?RS_show_page=0
In a heartwarming demonstration of the Senate’s truly bipartisan support for Wall Street, Sen. Sam Brownback – a Republican from Kansas – stepped in to help Democrats kill one of the bill’s most vital reforms. At the last minute, Brownback mysteriously withdrew his amendment to exempt auto dealers from regulation by the CFPB – a maneuver that prevented the Merkley-Levin ban on speculative trading, which was attached to Brownback’s amendment, from even being voted on. That was good news for car buyers, but bad news for the global economy. Senators may enjoy scolding Goldman Sachs in public hearings, but when it comes time to vote, they’ll pick Wall Street over Detroit every time.
The bill that was killed was sponsored by two democratic senators, and it had fifteen co-sponsors, all democrats but one (shout out to Bernie ‘democratic socialist’ Saunders). So I still see the attempts at reform coming out of the democratic party, and the pressure to kill them coming from the repubs- although obviously with some democratic participation.
While Milli-Vanilli squawks about doing battle against lobbyist to protect us, his boys at Treasury are doing the opposite. From nymag:
What that’s meant in practice is that Geithner’s team spent much of its time during the debate over the Senate bill helping Senate Banking Committee chair Chris Dodd kill off or modify amendments being offered by more-progressive Democrats. A good example was Bernie Sanders’s measure to audit the Fed, which the administration played a key role in getting the senator from Vermont to tone down. Another was the Brown-Kaufman Amendment, which became a cause célèbre among lefty reformer such as former IMF economist Simon Johnson. “If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” says the senior Treasury official. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.”
Sssshhhhh, you might shatter that alternate universe alpha-sloth has constructed in his mind.
Brown-Kaufman Amendment- once again two democratic senators sponsoring a financial reform bill, which attracted 30 democratic votes but only 3(!) republican votes. Which exactly illustrates my point- neither party is perfect, but one at least tries.
And as always, this all boils down to campaign finance and lobbying reform, which (surprise, surprise) is mostly opposed by republicans.
Alpha, I think it’s more accurate to say Brown & Kaufman are among the rare exceptions in either party who put their constituents’ interests ahead of Wall Street’s. Both of those two have earned my respect and gratitude. The GOP bloc vote in favor of its Wall Street masters should surprise no one.
But 28 democratic senators voted with Brown and Kaufman, while only 3 republicans did. Doesn’t that negate the “there’s-no-difference-between-the-parties” charge?
Ok, Mr. Alpha Sloth, If you want to play that game.
How many dems vs reps voted for WS bailiout?
Written like a true religious zealot. Good job!
Thanks- I got straight ‘A’s at the madrassa.
Matt Taibbi has a way with words when it comes to describing these Republicrat slimeballs and their machinations - especially the role of Countrywide’s very own Chris Dodd, the poster boy of government complicity in the housing bubble.
Throughout the process, Chris Dodd, the influential chairman of the Senate Banking Committee, has set new standards for reptilian disingenuousness – playing the role of stern banker-buster while taking millions in Wall Street contributions. Dodd worked overtime trying to craft a “bipartisan” bill with the Republican minority – in particular with Sen. Richard Shelby, the ranking Republican on the committee. With his dyed hair, porcine trunk and fleshy, powdery-white face, Shelby recalls an elderly sumo wrestler in drag. I happened to be in the Senate on the day that Shelby proposed a substitute amendment that would have stuffed the CFPB into the FDIC, effectively scaling back its power and independence. Throughout the debate, I was struck by the way that Dodd and his huge black caterpillar eyebrows kept crossing the aisle to whisper in Shelby’s ear. During these huddles, Dodd would gently pat Shelby’s back or hold his arm; it was like watching a love scene in a Japanese monster movie.
Your link redirected me to the RS home page. This link might work better?
http://www.rollingstone.com/politics/news/;kw=36899,157778#
Thanks, drumminj.
Does anyone have a feel for how many agency, prime, alt-A, option and unsecuritized ARMs due to recast over the next two years have interest rates that depend on the Libor? I am thinking the recent spike in Libor seems well-timed for the ARM recast tsunami crest, scheduled to last from the present through September 2012 or so.
Personal Finance Minute: All About Libor
May 28, 2010
The London interbank offered rate, used by banks to lend to each other in dollars, is tied to variable-rate loans in the United States and is hitting 10-month highs. Should you refinance? How should you plan ahead? Andrea Coombes reports.
“At the last minute, Brownback mysteriously withdrew his amendment to exempt auto dealers from regulation by the CFPB – a maneuver that prevented the Merkley-Levin ban on speculative trading, which was attached to Brownback’s amendment, from even being voted on.”
TBTF banks must be allowed to engage in risky speculative gambles, insured by the full faith and credit of the U.S. government, or else the global financial system will collapse!
The amendment was to allow the car dealers to continue all the funny money games they do with new car financing.
I’ve met Brownback. He’s an effin’ weasel. A typical politician, he’s good at saying one thing with a straight face, and then doing the opposite.
According to new polls, Gollum’s candidate has suddenly and mysteriously blown open a huge lead in the Republican candidacy side of the California governor’s race. This leads me to wonder whether it is possible for candidates to buy poll results?
Poll: Whitman again leads big in Calif. gov. race
AP – Meg Whitman, who is running for California Governor as a Republican, campaigns at Graniterock in Redwood …
Sat May 29, 11:26 pm ET
LOS ANGELES – A poll released Saturday night shows that former eBay chief executive Meg Whitman has stopped her plunge in recent polls to again take a large lead in the Republican race for California governor.
The poll from the Los Angeles Times and the University of Southern California also shows that former Hewlett-Packard chief executive Carly Fiorina has become the clear front-runner in the race to take on Barbara Boxer for her U.S. Senate seat.
Whitman leads state insurance commissioner Steve Poizner by 24 points — 53 percent to 29 percent — with less than two weeks to go before the June 8 primary.
But in a general election contest against the likely Democratic nominee, Attorney General Jerry Brown, she trails 44 percent to 38 percent in a race she once led, the survey showed.
The results differ sharply from a Public Policy Institute poll taken just 10 days ago showing Whitman with a nine-point lead over Poizner and the Senate race a statistical dead heat.
Both polls show that Whitman’s lead is nowhere near the advantage she enjoyed two months ago before a steady stream of attacks from Poizner labeling her as too liberal.
Whitman led by 40 points in the last Times/USC poll in March and by 50 in the last Public Policy Institute poll.
Both the billionaire Whitman and multimillionaire Poizner have funneled millions into the race. Whitman has donated $68 million to her campaign from her personal fortune, and Poizner has given $24.4 million to his campaign.
…
The poll from the Los Angeles Times and the University of Southern California also shows that former Hewlett-Packard chief executive Carly Fiorina has become the clear front-runner in the race to take on Barbara Boxer for her U.S. Senate seat.
Man, talk about damned if you do and damned if you don’t!
agreed. there is no good outcome here.
Oh she came out strongly against illegals the past few weeks.
She’s just whispering sweet nothings in the voting populace’s ear. Come November, if she gets in, it’ll be back to business as usual.
Is the LA Times poll conducted by statistically valid methods? I am remembering a famous historic poll in favor of the money bags candidate which proved spectacularly wrong; hopefully the same sort of statistical flaw will make a mockery of poll numbers favoring Gollum’s candidate for California governor.
Sunday May 30, 2010
Bloomberg
Whitman Leads in Republican Race for California Governor Nod
May 30, 2010, 8:52 AM EDT
By William Selway and Dan Hart
May 30 (Bloomberg) — Meg Whitman, the former EBay Inc. chief executive who’s seeking the Republican nomination to succeed Arnold Schwarzenegger as California’s governor, has a 24 percentage point lead over her rival less than two weeks before the first vote.
Whitman led state Insurance Commissioner Steve Poizner, 53 percent to 29 percent in a survey released today by the Los Angeles Times. The June 8 primary will pick the party’s candidate for the November general election.
The results show that Whitman, a billionaire who has spent $68 million on the race, has withstood advertisements focusing on her immigration views and on her past position as a Goldman Sachs Group Inc. director. The spots haven’t tipped the race in favor of Poizner, a Silicon Valley entrepreneur who sold his company to Qualcomm Inc. in 2000 for about $1.1 billion. Both of the candidates are 53.
Whitman has parried accusations from Poizner’s campaign that she has profited from pornography, backed President Barack Obama’s immigration amnesty plan and failed to vote in past elections. Democrats also have paid for ads highlighting Whitman’s role at Goldman Sachs, the Wall Street bank sued for fraud by the Securities and Exchange Commission in connection with the sale of mortgage-linked securities.
…
More From Businessweek
* Geithner Says U.S. Will ‘Never’ Lose Its Aaa Debt Rating
* Treasury 10-Year Futures Contracts Fall on Europe Rescue Plan
Several years back the Housing Wizard and I used to endlessly discuss here how “seller concessions” led to inflated appraisals. What a difference a few years makes — now even Washington DC-based real estate columnists clearly perceive the problem!
It’s kind of puzzling how, if the FHA understands that they are basically issuing underwater mortgages and guaranteeing them at the taxpayer expense, they are nonetheless continuing the practice? Wouldn’t it make more sense to eliminate the seller concessions entirely, thereby avoiding the problem of handing new home buyers government-sponsored, taxpayer-insured underwater mortgages?
And wouldn’t it be more appropriate to call these seller concessions a “deception” rather than an “attraction”? I probably never will be able to fully comprehend inside-the-beltway English.
FHA plans to halve mortgage loan’s 6% seller concession this summer
By Kenneth R. Harney
Saturday, May 29, 2010
One of the key attractions of FHA mortgage financing is going, going — but not quite gone. Sellers and buyers who move fast can still make the most of it.
Sometime this summer, the Federal Housing Administration plans to slash maximum “seller concessions” from 6 percent of the home price to 3 percent. Seller concession rules allow buyers to look to the property seller to pay for some services and taxes connected with the transaction — loan origination and local transfer fees, appraisals, inspections, closing and escrow costs, among others — though not the down payment.
Say you’re buying a $200,000 house. If you are using FHA financing under current rules, you can structure the contract so that the seller agrees to pay at settlement all closing costs and even the cost of some needed repairs, up to 6 percent of the price, or $12,000. On a $400,000 house, allowable concessions go to $24,000. That’s huge, especially if you have to struggle to come up with a 3.5 percent down payment and you’re not sure where you’ll find the closing and repair money.
Contrast that with using Fannie Mae or Freddie Mac conventional financing, in which seller concessions generally are limited to 3 percent. For many buyers, the extra negotiating flexibility built into the FHA program makes the choice of programs a no-brainer.
When FHA officials announced the policy change this year, they said the long-standing 6 percent maximum “exposes the FHA to excess risk by creating incentives to inflate appraised value.” That would occur when sellers agree to pay buyers’ closing and other expenses but merely tack on those costs to the final sale price of the house. Rather than agreeing to a $200,000 price as in the example above with $12,000 worth of concessions, the final contract price of the house would be $212,000.
If an appraiser did not detect and report the price boost, FHA would be insuring a mortgage on a house worth less than the sale price. In fact, because the rules allowed a 6 percent seller concession and the down payment was 3.5 percent, FHA would be insuring an underwater loan from the start. To limit further possible losses, FHA decided to cut the concessions limit in half.
…
Finally. But reducing seller concessions is only reducing the risk of FHA mortgages a teeny bit. They need to get rid of the low downpayment loans altogether.
It sounds like there will be an opportunity to comment on this FHA policy change within the next couple of months, when a Federal Register Notice is issued. My questions, which I encourage any of you who share them to ask in your own comment, are:
“1) Why does the federal government support seller concessions which result in encouraging low income households to assume a mortgage debt that exceeds the value of the home they are purchasing?
2) Doesn’t this increase the risk of putting low-income families on the path to a future foreclosure and household financial ruin?
3) Since these loans are federally guaranteed, don’t seller concessions put U.S. taxpayers on the hook for underwater mortgages?
4) Doesn’t the need to loan out more money than a home is worth encourage fraudulently inflated appraisals?
5) In short, given the obvious problems created by encouraging home purchases with taxpayer-guaranteed instantly-underwater mortages, wouldn’t it be wiser and in the best interest of the Nation to eliminate ’seller concessions’ entirely, rather than continuing with this insane policy?
‘In its announcement, the agency said the change would occur in “early summer” after publication of a Federal Register notice and a public comment period. But Lemar C. Wooley, an FHA spokesman, confirmed May 19 that there has been no Federal Register announcement.
Since public comment periods frequently run for 60 days, followed by a review period, it appears that any start date for the concessions change has slipped to late summer at the earliest. Wooley said in an e-mail that “early summer may be stretching it, but I’m told that we do still expect it this summer.”‘
I spoke with my mom a couple of days back. She is retired, 80+, living out a blissful retirement with my dad in a rust belt city suburb. Their neighborhood, to put it mildly, is “in transition” — i.e. it was 100 percent white when we grew up there half a century ago, and now is nearly 100 percent black. My mom and dad are, in fact, among the last Caucasian holdouts. Their property value has sunk with the neighborhood transition, but at least they have a paid-off mortgage.
Mom commented on the many black families that try to move into the area, then don’t make it because they soon fall into foreclosure. She said she didn’t understand how come this happened so frequently; I hinted that I did, but did not bore her with the details of how FHA financing is a recipe for encouraging future household impoverishment and foreclosure. How better to encourage a low-income black household to financially hang itself than to offer them a means to purchase a home in the suburbs with a mortgage which is underwater from the moment the closing documents are signed?
Why our government thinks it is a good policy to encourage low-income households to financially submerge themselves in a mortgage which exceeds the value of the home they are purchasing is truly a mystery to me. Can anyone who thinks they understand the societal benefit of this policy please enlighten me?
Little know fact:
The early colonies of this nation operated on the backs of those in “bonded servitude” an early form of debt bondage, whether of crime or money, long before we started bring over slaves.
In other words, we have a long tradition of keeping the poor, poor and making people who were not poor, poor.
“…long before we started bring over slaves.”
That puts it into perspective. The FHA’s effort to get low income buyers into underwater mortgages represents a modern form of government-sanctioned slavery. The main difference between this modern form of slavery and the nineteenth century variety is that America’s nineteenth century slaves were forced into bondage. Today’s debt slaves put themselves into that situation by their own free choice.
- Try not to enslave yourself with an underwater FHA mortgage.
- Try not to catch yourself a falling knife.
Tut tut. Not government, but corporate.
East India Co. ring any bells?
Oh, and no they don’t. Some do, of course, but others have no choices these days. Offshoring anyone? Recessions every 6 years?
The game IS rigged.
This era of government-sponsored-and-guaranteed lending looks like the sowing of another decade’s worth of U.S. housing market disaster. Can anyone suggest a more optimistic future outcome from Uncle Sam’s takeover of the mortgage lending sector than the bleak one I foresee?
Bloomberg
FHA Home-Financing Volume Sign of ‘Very Sick System’ (Update2)
May 24, 2010, 12:13 PM EDT
(Adds comment from Bank of America director in 15th paragraph.)
By Jody Shenn and John Gittelsohn
May 24 (Bloomberg) — Loans guaranteed by the Federal Housing Administration, the U.S.-owned mortgage insurer, may be involved in more home-purchase transactions than borrowing financed by Fannie Mae and Freddie Mac.
FHA lending last quarter may have topped the combined volume of government-supported Fannie Mae and Freddie Mac in a home-lending market that’s still a “government-financed market,” David Stevens, the agency’s head, said today at a conference in New York, citing research by consultant Potomac Partners.
“This is a market purely on life support, sustained by the federal government,” he said at the Mortgage Bankers Association conference. “Having FHA do this much volume is a sign of a very sick system.”
The FHA, which backs loans with down payments as low as 3.5 percent, insured $52.5 billion of home-purchase mortgages in the first quarter, compared with $46 billion of purchases of the debt by Fannie Mae and Freddie Mac, according to data compiled by Washington-based Potomac Partners.
The FHA and Fannie Mae and Freddie Mac, which regulators seized in 2008, have been financing more than 90 percent of U.S. home lending after a retreat by banks and the collapse of the market for mortgage bonds without government-backed guarantees.
…
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* Housing Rebound at Least 3 Years Away, Ranieri Says (Update1)
* Euro-Region Central Banks Buy Bonds for Fifth Day, Traders Say
* Lower Home Prices Can Fix What Government Can’t: Caroline Baum
* Mortgage Foreclosures Hit Record as Job Losses Strain Budgets
I’ve got a bad feeling about today’s Indy 500.
Speeds are up. Too many rookies. Too many fast guys didn’t qualify well, so they are scattered throughout the field, instead of being at the front of the field. All the teams (except Penske and Ganassi) were having trouble setting up the cars. Supposed to rain this afternoon, so the wind and temp may change significantly.
They still run that race? I think I will watch a quilting bee instead. At least they can bump into each other in NASCAR. Maybe a couple good wrecks will make the Indy worth watching. Just make sure to listen to it with the volume turned down, lest the overreaching hype surrounding Danica Patrick make you ill.
If you are any kind of gearhead at all, you need to go to Indy at least one. TV does not due those cars, or the track, justice.
Indy has no banking in the turns…..the trick @ Indy is balancing the downforce needed to go thru the turns, against the low drag needed for speed in the straights. If you miss, you are either safe and slow in the straights, or fast on the straights, but have to get off the power in the turns, because you can’t turn the car.
Saw Rick Mears win his fourth Indy 500. He was running the last 50 laps flat out, running race laps faster than he qualified (on the poll). Less than three years after he had shattered both ankles in a crash.
Danica is what happens when you are more concerned with “branding” and “synergies”, than you are about winning races.
Open wheel racing is real racing with balls of titanium…See the NannyCar’s bumping into each other all the time…Try that in open wheel…
With most of the state of California on the verge of financial collapse, I guess we are supposed to put our faith in the superrich to lead us out of the wildnerness of collective impoversishment?
If it comes down to Brown versus Whitman, I will definitely vote for reinstatement of Governor Moonbeam, rather than invite Gollum’s candidate to sell California’s interests to Wall Street.
primary election
Money for nothing: when the wealthy seek office
Spectacular failure record of very affluent Californians seeking office doesn’t stop more of them from trying
By John Marelius, UNION-TRIBUNE STAFF WRITER
Saturday, May 29, 2010 at 11:43 p.m.
California Insurance Commissioner Steve Poizner answers a question during a mid-March debate in Costa Mesa with former eBay executive Meg Whitman. / Associated Press
Online: For more election news and candidate information, go to uniontrib.com/election2010.
Meg Whitman, Steve Poizner and Carly Fiorina are the latest in a long list of super-wealthy Californians who have dug deeply into their very deep pockets to run for governor or the U.S. Senate, with little or no political experience.
The track record of such candidates is not impressive.
“The political history of California is littered with the remains of wealthy, self-funded candidates who thought they could magically become a major officeholder in this state,” said Democratic strategist Darry Sragow.
He should know. Sragow managed airline mogul Al Checchi’s 1998 Democratic primary campaign for governor. Checchi spent $40 million of his own money and received 12 percent — $53 per vote — in getting trounced by Gray Davis, who went on to become governor.
The example of Checchi and many others in recent decades does not discourage the super-rich from trying.
Not a day goes by that Whitman, who is running for the Republican nomination for governor in her first campaign, does not tout her record of leading eBay from being a small, online startup to a corporate powerhouse as proof that she possesses the acumen to rescue California from its economic morass.
Her Republican opponent, state Insurance Commissioner Steve Poizner, similarly brandishes his record of founding two successful Silicon Valley high-tech companies.
In the Senate race, Republican candidate Carly Fiorina boasts of working her way up from being a secretary to CEO of one of the world’s largest technology companies, Hewlett-Packard.
Political professionals and academic analysts say California voters often find such résumés, however impressive, to be wanting. “From the perspective of voters, somebody who has been very successful in something other than politics and suddenly decides he wants to hold high public office bears the burden of proof,” Sragow said. “It’s not clear to the voters that being a successful corporate CEO or entrepreneur gives a candidate the skills that are needed to run government.”
Nevertheless, the presumptive Democratic nominees — state Attorney General Jerry Brown for governor and incumbent Sen. Barbara Boxer — are preparing for opponents who have seemingly limitless resources.
Since the early 1960s, 18 wealthy Californians have spent lavishly from their personal fortunes on campaigns for governor or the U.S. Senate. Of those, 17 failed, many spectacularly so.
The only success story was an anomaly — Arnold Schwarzenegger, who was elected governor in the 2003 recall vote. There were no partisan primaries in that election, which was a huge benefit to Schwarzenegger, a moderate Republican who was suspect even then among conservative voters, who have outsize influence in GOP primaries.
“It doesn’t count, as far as I’m concerned. It’s never going to happen again. There are myriad reasons why Arnold could put it together — the exceptional election, his celebrity status,” said Sherry Bebitch Jeffe, a political analyst at the University of Southern California School of Policy, Planning and Development. “So he’s the exception that proves the rule that they never make it.”
…
BIG SPENDERS
Meg Whitman, Steve Poizner and Carly Fiorina had better hope history doesn’t foreshadow their fate. Seventeen other wealthy Californians with little or no political experience have spent freely from their personal fortunes to run for governor or U.S. Senate dating back to the early 1960s.
Only one was elected — Gov. Arnold Schwarzenegger, who won the 2003 recall election and was re-elected in 2006.
The others:
2006: Steve Westly, state controller/high-tech executive, placed second to Phil Angelides for Democratic nomination for governor with 43 percent.
2002: Bill Simon , venture capitalist, won Republican nomination for governor, lost to Gray Davis in general election with 42 percent.
1998: Al Checchi, airline CEO, placed second to Davis for Democratic nomination for governor with 12 percent.
1998: Jane Harman, congresswoman married to audio-equipment-company founder, placed third to Davis for Democratic nomination for governor with 12 percent.
1998: Darrell Issa , auto-security-company founder from Vista, placed second to Matt Fong for Republican nomination for Senate with 19 percent.
1994 : Michael Huffington, congressman/oil-company heir, won Republican nomination for Senate, lost to Dianne Feinstein in general election with 45 percent.
1994: Ron Unz, software entrepreneur, placed second to Pete Wilson for Republican nomination for governor with 34 percent.
1986: Arthur Laffer, economist, placed seventh to Ed Zschau for Republican nomination for Senate with 4 percent.
1982: Ted Bruinsma, businessman, placed seventh to Wilson for Republican nomination for Senate with 2 percent.
1982: Gore Vidal, author, placed second to Jerry Brown for Democratic nomination for Senate with 15 percent.
1976: Alphonzo Bell, congressman/oil-company executive, placed third to S.I. Hayakawa for Republican nomination for Senate with 23 percent.
1976: Bob Wallach, attorney, placed third to John Tunney for Democratic nomination for Senate with 2 percent.
1974: William Matson Roth, developer, placed fourth to Brown for Democratic nomination for governor with 10 percent.
1974: Herb Hafif, attorney, placed seventh to Brown for Democratic nomination for governor with 3 percent.
1970: Norton Simon, industrialist, placed second to George Murphy for Republican nomination for Senate with 33 percent.
1966: William Penn Patrick, cosmetics executive, placed fourth to Ronald Reagan for Republican nomination for governor with 2 percent.
1964: Leland Kaiser, securities executive, placed second to Murphy for Republican nomination for U.S. Senate with 33 percent.
Politics is an ego trip for these people. They made huge fortunes but it’s not enough, now they want fame.
Neediness and a craving for applause is part of their pathological make-up. Along with the compulsion to enrich their crony capitalist patrons.
An Agatha Christi quote:
“Most successful people are unhappy. That’s why they are successes - they have to reassure themselves about themselves by achieving something that the world will notice.
“The happy people are failures because they are on such good terms with themselves they don’t give a damn.”
Therein lies the source of the rift between me and my (more successful) boss.
happy are the sloths
… and the rush that comes from wielding power over the little people.
We went to see Robin Hood last night. At least the modern form of taxation doesn’t involve burning down villages if they won’t cough up tribute.
We went to see Robin Hood last night. At least the modern form of taxation doesn’t involve burning down villages if they won’t cough up tribute.
Guess you have not been to downtown Detroit, Philadelphia, Cleveland or Baltimore recently…
You are right — point taken!
I also wonder how much of this boils down to the same for people who vote for them. ie - “Meg Whitman ran ebay. I use ebay all the time. I’m voting for Meg Whitman.” see also - Ronald Reagan, Arnold Schwarzensomething. High school taught people it’s better to be part of a clique, or to gather fame, rather than be out there on the fringe.
I like being on the fringe, it’s less crowded for one thing. Plus the fringe allows one to get a perspective they can’t get when immersed in the mainstream.
The Land of the Lemming is inherited to the lemming that stays behind.
I once heard a guy proudly proclaim to a reporter that he was going to vote for candidate x, because “I think he’s gonna win and I like to back a winner!” In other words, he just wants to be on the winning side. And he’s stupid enough to think it makes sense and should be announced to a reporter. Attraction of the mob.
I once heard a guy proudly proclaim to a reporter that he was going to vote for candidate x, because “I think he’s gonna win and I like to back a winner!” In other words, he just wants to be on the winning side.
I think that’s how most people vote. Note how few vote for a 3rd party candidate, simply because “he doesn’t stand a chance of winning”/”throwing my vote away”. Anyone who’s thinking in those terms is looking at elections as if it were a horse race.
05/27/2010
Geithner in Europe
US and EU Oceans Apart on Fiscal Policy
US Treasury Secretary Timothy Geithner with German Finance Minister Wolfgang Schäuble on Thursday in Berlin.
Europe is eager to begin paying down sovereign debt. The US wants to see Germany and France continue stimulus measures. With Treasury Secretary Timothy Geithner in Germany on Thursday, the trans-Atlantic differences in fiscal policy have become difficult to ignore.
The two were eager to demonstrate unanimity. US Secretary of the Treasury Timothy Geithner and his German counterpart, Finance Minister Wolfgang Schäuble, went before the press in Berlin on Thursday and announced that they had reached “broad agreement” on the need to regulate the global financial system.
Geithner also praised Berlin’s “leadership role” in putting together the €750 billion ($920 billion) plan, agreed on earlier this month, to help European governments struggling with sovereign debt and said that he is working closely with Europe “to make sure that we are strengthening and reinforcing global recovery.”
But the camaraderie displayed on Thursday belied some recent tension in the trans-Atlantic relationship. For one, the US has not been impressed with Germany’s recent decision to ban certain kinds of naked short selling, considering it an unhelpful bit of unilateralism.
On a more fundamental level, however, Washington is concerned that, should Europe overreach in its rush to cut government spending, it could endanger the fragile economic recovery that has taken hold on the Continent and around the globe. In particular, the US would like to see countries like Germany and France continue efforts to stimulate their economies.
Rush for the Exits
During a stop in London on Wednesday, Geithner held discussions with his British counterpart George Osborne. According to a report in the Wall Street Journal, Geithner underlined the dangers should Europe turn away from fiscal stimulus.
Christina Romer, who heads up the White House Council of Economic Advisers and who was with Geithner in London on Wednesday, said that European countries should be wary of cutting spending too quickly. “There is a certain amount of rush for the exits on fiscal policy,” she told reporters. The US is hoping that stimulus-fueled growth will ultimately result in higher tax revenues which can then be used to pay down debt.
Paul Volcker, former chairman of the US Federal Reserve and an economic adviser to US President Barack Obama, also argued recently that Europe should focus on encouraging growth rather than cutting spending. Referring specifically to France and Germany, he said in an interview with Bloomberg radio earlier this month that “it would help a lot if the rest of Europe, the strong part of Europe … if they have more growth, that will help these countries on the periphery.”
Germany, however, is taking the opposite approach. Rather than take on even more debt to ramp up the economy, Chancellor Angela Merkel wants to set an example for Europe on how to cut spending and reduce budget deficits. Her government is currently looking into ways to make significant spending cuts. Many economists in Europe even view deficit and debt reduction as a key precursor to economic growth.
“Crises often present opportunities, and it looks like Europeans are eager to take advantage,” says Michael Hüther, head of the Cologne Institute for Economic Research. “Many studies show that (budget cuts) prepare the way for above average growth.”
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could it be time to start buying the Euro.
My guess is some of this is jawboning to stop the slide of the Euro. Last week we had China come out and give the Euro a vote of confidence. I read an article the day prior saying that china should start buying euro bonds and stop buying US treasuries for the same reason.
Central Bankers can only keep the whole system afloat if they play together. The minute one of them creates a safe place for money that won’t depretiate the flock will run there leaving the others to face falling currencies and rising interest rates.
I agree. The obvious strategy for Western central banks to play in their War on Savers is to devalue all fiat currencies in synch, thereby relieving Western governments of their underwater sovereign debt positions without leaving savers any available currency refuges in which to hide.
I agree. The obvious strategy for Western central banks to play in their War on Savers is to devalue all fiat currencies in synch, thereby relieving Western governments of their underwater sovereign debt positions without leaving savers any available currency refuges in which to hide.
Yes, it’s too bad that there isn’t a money that isn’t issued by any government and therefore can’t be devalued by government action.
If there were, then people could use that to protect themselves. Something like this.
Encouraging a fully developed, heavily capitalized nation like Germany to emulate a developing nation’s growth strategy seems patently inane. Once the China bubble pops, the inanity will become even more stark.
27/05/2010
Geithner tells Europe to emulate China on growth
US Treasury Secretary Timothy Geithner said Thursday Europe should follow China’s lead and boost growth since US consumers can no longer support the global economy alone.
Geithner also said ahead of a summit of the G20 group of leading economies in Canada in late June that the United States and Europe were in “broad agreement” over the need to put into place tighter lending rules for banks.
“If the world is going to grow at its potential then we are going to have a more balanced pattern of growth globally,” Geithner said after talks in Germany, Europe’s biggest economy.
“In the United States we are trying to make sure that growth … comes with more savings, more private investment. US consumers are going to be less of a source of demand for the world in the future.”
He pointedly drew the contrast between Europe and China.
“You can see China recognising that imperative and putting in place a very strong programme of reforms to make sure that growth is coming more from domestic demand … Already consumption is growing much more rapidly.
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“In the United States we are tryihg to make sure that growth … comes with more savings, more private investment.”
This guy should write material for SNL.
Yes is that what ZIRP is all about
encouraging saving???????????????????????????
This post is a test…
It looks like the blog software is now stripping out the ‘target’ attribute of anchor tags/links…testing the theory here
test link
Hrm..that sucks.
Ben, can you chime into why the blog software is doing this? It sucks that all links posted in comments are forced to open in the same browser window (unless one uses a shortcut to open the link in a new window).
I don’t have any idea. We haven’t upgraded the wordpress software since 2007, nor have we added any plugins.
Upgrades are free. Good for security as well.
We haven’t upgraded the wordpress software since 2007, nor have we added any plugins
Hrm…I swear it used to work. Maybe I’m mis-remembering…
oops, that was meant as a reply to ben, not eco
Trying again, making sure I’ve not made a mistake:
(link is to the JT extension, just to have something to link to)
targetting “_blank”
targetting “_new”
Is it too strong to refer to Spanish banking sector consolidation as an “implosion”?
P.S. Early in the 2000s, I compared notes with a visiting scholar from Spain about the California housing bubble versus the Spanish housing bubble. In his opinion, Spain’s housing was far more overvalued than California’s.
* The Wall Street Journal
* BUSINESS
* MAY 30, 2010, 1:29 P.M. ET
Spain’s Savings Banks Bow to the Inevitable: Mergers
By JONATHAN HOUSE
MADRID—In a tumultuous seven days, 12 of Spain’s 45 savings banks have begun merger talks and a 13th has been rescued by the central bank.
The troubled sector, which had long resisted government pressure to merge, now is bowing to the inevitable, hastened by the Bank of Spain’s willingness to take over ailing lenders and by new rules it has proposed that would require all Spanish banks to speed up the recognition of losses from bad loans.
The savings banks, or cajas, are bearing the brunt of the collapse of Spain’s decade-long housing boom. Their worsening finances come at the same time that international investors are jittery about the government’s fast-rising debt. Friday, Fitch Ratings cut the country’s triple-A credit rating by a notch after European markets had closed, adding to the pressure on an already weakened euro and likely to push down the Spanish stock market on Monday.
Also Friday, Spain’s two largest savings banks, Barcelona-based La Caixa and Caja Madrid, announced separate merger plans with some of the country’s weakest savings banks. Both are considered to be financially sound, and are expected to accelerate the consolidation process.
Combined with the tougher line from the Bank of Spain, “this points to a phase of mergers likely to occur at an increasing pace in coming weeks,” said Giada Giani, an economist at Citigroup in London.
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The real aim of censorship
DHAKA (AFP) – Bangladesh has blocked social networking site Facebook for posting caricatures of the Prophet Mohammed and “obnoxious” images of the Muslim-majority country’s leaders, an official said Sunday.
Facebook was blocked late Saturday, the Bangladesh Telecommunications Regulatory Commission said.
The move was ordered after the website “hurt the religious sentiments of the country’s majority Muslim population” by publishing caricatures of Mohammed, BTRC acting chairman Hasan Mahmud Delwar told AFP.
“Some links in the site also contained obnoxious images of our leaders including the father of the nation Sheikh Mujibur Rahman, current Prime Minister Sheikh Hasina and the leader of the opposition,” he said.
Bangladesh’s elite anti-crime Rapid Action Battalion (RAB) has arrested one young man over the images attacking the political leaders.
“A special intelligence team of the RAB arrested him and he has been charged with spreading malice and insulting the country’s leaders,” senior RAB official Enamul Kabir said.
“hurt the religious sentiments of the country’s majority Muslim population”
Time to grow a thicker skin!
FTITCTAJ.
Adventures in homeownership (garden edition):
Because the soil is going to need much modification (typical Central Valley clay), I’m just growing gourds and pumpkins this year*. The fact that I have a two-year-old and an infant also has something to do with this.
I stick the shovel into the weedstuff that is my “lawn” and find a surprise: about four inches down is a plastic netting, one by two inches across. Apparently when they laid the sod thirty years ago, they left it in place instead of removing it like a reasonable person would. Guess what? Plastic doesn’t biodegrade, especially not 1980 plastic.
On the one hand, to get rid of the mesh I’m going to have to dig up the whole backyard. On the other hand, as I look around the weeds- the nettles, the thistle, and the stupid burclover- I think that might actually be the easier course. Get a sifter, dig up a small section at a time (metal rakes really help with the mesh), and sift out the weed roots, rocks, thirty years of lawn detritus, and put down real grass seed.
Why yes, I am insane. Of course, I wouldn’t even consider it if I didn’t have grandparents in the area to take the toddler.
*I apparently suck at planting directions. Of the dozen or so plants that have come up, most are OUTSIDE of the prepared bed. The toddler may have something to do with this.
Seems like Fresno where I grew up. you can nearly grow anything there. I am proud of my cacti I repotted at my Phoenix apartment. They are happy to be watered no more often than once every three weeks.
Oh yes, the soil is wonderful after a few years, but when you start it’s pretty close to hardpan. You break it up and rake it through and add in your homegrown compost and grow tomato plants that are six feet tall and give fruit all summer long. My dad was having flashbacks to when he started his garden. (He tore out the volunteer blackberries for me! AND dug up the root balls! So they’ll take a while to come back…)
Stinging nettles and thistle are edible. I’m sure you can find good online sources for how to harvest and prepare. I imagine burclover is, too, but I don’t know.
I think buckwheat’s one of the best “green manures” to fix poor soil. It attracts lots of bees, too. Just after it blossoms and the bees have worked it over for a couple of days, till or shovel it under. Only takes about 6 weeks. Don’t let it go to seed!
That mesh stuff sucks for sure. I’ve never heard of people pulling it off as the sod is laid but maybe it’s possible; my guess is that the sod would fall apart. Maybe if you get a good crop of buckwheat and the dirt loosens you will be able to pull out large pieces of the net.
Good luck!
I mostly care about the prickly stuff because of the inquisitive toddler. That’s the problem with burclover, too- it’s a nitrogen fixer that looks like a running clover, but it’s got thousands of those spiral burrs on it. It’s valued as ruminant feed except for sheep in spring, when the burrs get into their coats and are a pain to remove.
Incidentally, clover is NOT A WEED. Clover is a nitrogen fixer that used to be highly desired in the green carpet. The only reason it has got its “weed” designation is that the chemical makers have found no way to have “weed & feed” products that spare both grass and clover while killing the real weeds off. I would love a clover lawn* and in fact have seeded quite a bit of drought-resistant strains over patches that were dead last year. It’s coming in nicely. Probably get killed with a weed & feed, though.
*Evil Rob is allergic to grass particulates. Why a lawn? Because kids need a place to run and it does help lower the ambient temperature as opposed to dirt.
“If our operations and our ginormous bonuses are not guaranteed by sovereign governments, the world economy is doomed!”
The Financial Times
Bankers’ ‘doomsday scenarios’ under fire
By Chris Giles in London
Published: May 30 2010 23:02 | Last updated: May 30 2010 23:02
Banks are exaggerating the economic effects of the regulations they are likely to face in the coming years, the economist running an international impact study has told the Financial Times.
In a pre-emptive blast before the banks launch their own lobbying effort on June 10, Stephen Cecchetti, chief economic adviser to the Bank for International Settlements, said the banks’ “doomsday scenarios” were based on their assuming “the maximum impact of the maximum change with the minimum behavioural change”.
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He gave three examples of banks over-estimating the likely effects of the new regulations, which are due to be agreed by the end of the year, with gradual implementation expected to start in 2012.
First, he said banks are claiming that new liquidity rules would force them to swap large quantities of high-yielding loans for low-yielding government bonds, which would have an impact on their profitability and lending. Instead, he said they could comply with the rules by lengthening the maturity of their liabilities so they better match those of their assets at much lower cost.
Second, he said they assumed investors would demand the same returns on new tranches of equity capital when this equity would make banks more resilient, lowering risk to equity holders and the cost to banks.
And third, he said the warnings of high costs relied on banks’ estimates that the new rules would reduce credit growth and economic growth severely. “We must always keep in mind that one of the causes of the crisis was that credit growth was too fast.”
Bloomberg
Lower Home Prices Can Fix What Government Can’t
March 25, 2010, 8:35 PM EDT
Commentary by Caroline Baum
March 26 (Bloomberg) — Thud! Four years after the peak of the housing bubble, home sales are slumping… again.
New home sales, which lead the complex of housing indicators, fell to an all-time low of 308,000 in February, the fourth consecutive monthly decline. For existing home sales, it was the third consecutive drop after last year’s tax-credit- driven bounce.
Homebuilder sentiment has rolled over. Housing starts are bumping along the bottom, with new construction too low to accommodate normal growth in households, according to Michael Carliner, a Potomac, Maryland, economic consultant specializing in housing.
Alas, all the Fed’s purchases and all the government’s men can’t put the residential real estate market together again.
Between them, the federal government and central bank can lower mortgage rates, modify mortgages, use its power to get private lenders to modify mortgages, and create incentives to move inventory, such as the first-time homebuyer’s tax credit.
What they can’t do is manufacture enough artificial demand for an asset that was artificially inflated to begin with. Prices will have to fall, which is how supply is allocated in a market economy. (An occasional reminder is in order given the current spend-money-to-save-money mindset.)
The Federal Reserve will complete its purchase of $1.25 trillion agency mortgage-backed securities at the end of this month. Its efforts on our behalf have driven 30-year fixed-rate mortgage rates to half-century lows of sub-5 percent, “which should have been more stimulative than it was,” Carliner says.
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Bloomberg
Housing Rebound at Least 3 Years Away, Ranieri Says (Update1)
April 28, 2010, 4:44 PM EDT
(Adds Ranieri interview comments in seventh paragraph, Mizel comments in 10th.)
By Dan Levy and Daniel Taub
April 28 (Bloomberg) — The U.S. housing market won’t recover for three to five years as mounting foreclosures hold down prices, according to mortgage-bond pioneer Lewis Ranieri.
“There’s another big leg down and the question is how long does it stay,” Ranieri, chairman of Ranieri Partners LLC, said during a panel discussion today at the Milken Institute Global Conference in Beverly Hills, California. “You can’t have much of a rally when you’ve got this big overhang.”
Home foreclosures probably will reach a record this year with more than 1 million properties seized by banks, according to data seller RealtyTrac Inc. Unemployment was 9.7 percent in March, unchanged for a third month, according to the Labor Department, and a fifth of mortgaged U.S. homes were worth less than their loans in the fourth quarter, Zillow.com reported.
Prices for homes in 20 U.S. metro areas rose 0.6 percent in February from a year earlier, the first gain since December 2006, according to the S&P/Case-Shiller index. Eleven of the cities showed year-over-year declines, led by a 15 percent drop in Las Vegas and a 6 percent drop in Tampa, Florida.
“These data point to a risk that home prices could decline further before experiencing any sustained gains,” David Blitzer, chairman of the S&P index committee, said yesterday in a statement. “It is too early to say that the housing market is recovering.”
‘Cloud’ of Distress
At least 3 million new properties will join the 5 million already in a “cloud” of distress in the next 18 months, said Ranieri, who helped turn New York-based Salomon Brothers into Wall Street’s most profitable firm in the 1980s by being one of the first to package mortgages and sell them as securities.
“It’s an immense problem if they don’t manage it,” Ranieri, 63, said in an interview after the panel, referring to government and lender efforts to hold back sales of foreclosed properties. The programs are “a ton better” than flooding the market, he said.
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True confession: The global housing bubble is unraveling too quickly at this point to keep up with the news.
Bloomberg
China’s Home Prices to Fall 20% This Year, BNP Says (Update4)
April 23, 2010, 3:38 AM EDT
(Adds central bank adviser comments in 10th paragraph)
April 23 (Bloomberg) — China’s home prices may fall by as much as 20 percent in the second half, as government measures to curb credit, increase land supply and a potential property holding tax cool speculation, according to BNP Paribas.
“The State Council and political leadership have demonstrated a strong political will, at least at a central level, to curb the property bubble,” BNP analysts Chen Xingdong and Isaac Meng said in a report today. The cabinet “considers elevated property prices and further rises as not only economic- financial risks but also as undermining social stability.”
Property prices in 70 Chinese cities surged by a record 11.7 percent in March from a year earlier, prompting the government to announce measures last week that increased the size of down payments, raised interest rates on second homes and barred banks from funding purchases of third homes.
BNP joins Citigroup Inc. in predicting prices may drop as much as 20 percent as tightening measures take hold. A “turning point” in the real-estate market is “unavoidable,” Citigroup analysts Oscar Choi and Marco Sze said in a report yesterday.
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Here is one sure-fire way to get rid of the problem of houses that won’t sell at prices the sellers are willing to accept: BULLDOZE THEM.
US cities may have to be bulldozed in order to survive
Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic “shrink to survive” proposals being considered by the Obama administration to tackle economic decline.
By Tom Leonard in Flint, Michigan
Published: 6:30PM BST 12 Jun 2009
An empty house in Detroit Photo: DEREK BLAIR
The government looking at expanding a pioneering scheme in Flint, one of the poorest US cities, which involves razing entire districts and returning the land to nature.
Local politicians believe the city must contract by as much as 40 per cent, concentrating the dwindling population and local services into a more viable area.
The radical experiment is the brainchild of Dan Kildee, treasurer of Genesee County, which includes Flint.
Having outlined his strategy to Barack Obama during the election campaign, Mr Kildee has now been approached by the US government and a group of charities who want him to apply what he has learnt to the rest of the country.
Mr Kildee said he will concentrate on 50 cities, identified in a recent study by the Brookings Institution, an influential Washington think-tank, as potentially needing to shrink substantially to cope with their declining fortunes.
Most are former industrial cities in the “rust belt” of America’s Mid-West and North East. They include Detroit, Philadelphia, Pittsburgh, Baltimore and Memphis.
In Detroit, shattered by the woes of the US car industry, there are already plans to split it into a collection of small urban centres separated from each other by countryside.
“The real question is not whether these cities shrink – we’re all shrinking – but whether we let it happen in a destructive or sustainable way,” said Mr Kildee. “Decline is a fact of life in Flint. Resisting it is like resisting gravity.”
Karina Pallagst, director of the Shrinking Cities in a Global Perspective programme at the University of California, Berkeley, said there was “both a cultural and political taboo” about admitting decline in America.
“Places like Flint have hit rock bottom. They’re at the point where it’s better to start knocking a lot of buildings down,” she said.
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May 28, 2010 at 09:21:44
Housing prices will keep falling. Here’s why.
By Richard Clark (about the author) Page 1 of 2 page(s)
For OpEdNews: Richard Clark - Writer
If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern re: home prices. As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier….
Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier. Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.” (”Number of the Week: 103 Months to Clear Housing Inventory,” by Mark Whitehouse, Wall Street Journal http://blogs.wsj.com/economics/2010/04/24/number-of-the-week-103-months-to-clear-housing-inventory/)
Got that? There’s a 9-year backlog of distressed homes. The banks are deliberately fudging the numbers to hide how bad things really are. The number of homes in late-stage foreclosure is not 1.1 million, but nearly 6 million 5 times more than the banks are admitting. Housing will be in the doldrums for a decade or more. It’s shameful that people can’t get basic information like this to help them make their investment decisions. The banks couldn’t pull off this type of information warfare without the help of government officials pulling strings from inside. Bernanke and Geithner must be involved.
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Why would Barclays think that only 1.6 million “distressed” homes would be sold in 2010, when they openly admit that there’s 4.6 million homes already in the foreclosure pipeline? What does Barclays know that the public is not supposed to know?
Clearly, the banks have worked out a deal with Geithner and Bernanke to sell distressed inventory in dribs and drabs rather than all at once. That keeps prices high and makes their losses more manageable. But isn’t that collusion or, at the very least, price fixing? The government definitely HAS a role to play in helping people keep their homes or providing assistance when they lose them, but they have no right to scam the public by stealthily manipulating the market to save underwater financial institutions.
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I like this guy’s writing — perhaps because so much of what he says reminds me of my own economic perspective.
May 6, 2010 at 08:54:11
How and why Wall Street had to decouple from Main Street and the real economy
By Richard Clark (about the author) Page 1 of 3 page(s)
Bush, Greenspan and many other high-ranking officials understood the problem with subprime mortgages and knew that a huge asset bubble was emerging from them that threatened the real economy. But while the housing bubble was more than just an innocent mistake, it wasn’t caused by any kind of “conspiracy,” which Webster defines as, “a secret agreement between two or more people to perform an unlawful act.”
No, it’s actually worse than that, because bubble making has become the predominant endeavor on Wall Street, and is being used by the financial elite to bypass the inherent 21st century structural problems of capitalism itself, mainly stagnation.
The main stakeholders in Wall Street’s bubble-making agenda didn’t need to convene any kind of conspiratorial meeting to decide on what they wanted or how they were going to get it. They already knew what they wanted; all they needed was a process that would help them maintain profitability even as the “real” economy remained stuck in the mud. And that process quickly became obvious to all of them. UCLA history professor Robert Brenner has written extensively on this topic and easily dispels the mistaken view that the real economy is “fundamentally strong” (as claimed by former Treasury secretary Henry Paulson).
Here’s Brenner’s explanation:
“The current crisis is more serious than the worst previous recession (1979- 1982) of the postwar period, and could conceivably come to rival the Great Depression. Economic forecasters have underestimated how bad it is because they have over-estimated the strength of the real economy and failed to take into account the extent of its dependence upon a buildup of debt that relies on asset price bubbles. In the U.S., during the recent business cycle of the years 2001-2007, GDP growth was by far the slowest of the postwar epoch. There was no increase in private sector employment. The increase in plants and equipment was only about a third of the increase in the previous period, and was a postwar low. Real wages were basically flat. There was no increase in median family income for the first time since World War II. Economic growth was driven entirely by personal consumption and residential investment, which would not have been possible without easy credit and rising house prices. Economic performance was weak, even despite the enormous stimulus from the housing bubble and the Bush administration’s huge federal deficits. Housing by itself (it’s growth fueled by the newly relaxed requirements for getting a mortgage) accounted for almost one-third of the growth of GDP and close to half of the increase in employment in the years 2001-2005. It was, therefore, to be expected that when housing prices stopped going up and the housing bubble burst, wages, consumption and residential investment would fall, and the economy would plunge.” (Wages were simply too low to allow workers to buy enough of what was being produced.)
(Source: “Overproduction, not Financial Collapse, is the Heart of the Crisis,” Robert P. Brenner speaks with Jeong Seong-jin, Asia Pacific Journal) Click here
What Brenner describes is a “real’ economy that’s flat on its back, an economy that — despite unfunded tax cuts, massive military spending and gigantic asset bubbles — can barely produce enough to be described as “positive growth.’
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May 22, 2010 at 08:17:29
Banksters aren’t betting against Greece alone; they’ve got plans for Portugal, Ireland, and Spain as well
By Richard Clark
Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.
Contracts known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire, such as a default by a company or, in the case of Greece, an entire country. So, if Greece reneges on its debts, traders who own these swaps will profit big-time.
“It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich.
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What’s wrong with modern banking?
There are too many opportunities for banksters to legally bet on financial collapse, and to turn the bets into sure-things by sowing the seeds of the collapse events on which bets are placed.
Case in point: Gollum’s subprime securitization scheme, coupled with their bets on subprime collapse. This is Broken Window investing at its worst!
April 27, 2010 at 10:56:23
The Wall Street Takeover and the Next Financial Meltdown
By Richard Clark (about the author) Page 1 of 7 page(s)
By now, most people who have followed the financial crisis know that the bailout of AIG was actually a bailout of AIG’s “counterparties” — the big banks like Goldman Sachs to whom the insurance giant owed billions when it went belly up.
What is less understood is that the bailout of AIG counter-parties like Goldman and Société Générale, a French bank, actually began before the collapse of AIG, before the Federal Reserve paid them so much as a dollar. Nor is it widely understood that these counterparties actually accelerated the wreck of AIG in what was, ironically, something very like the old insurance scam known as “Swoop and Squat,” in which a target car is trapped between two perpetrator vehicles and wrecked, with the “mark’ in the game being the target’s insurance company — in this case, our government.
This may sound far-fetched, but the financial crisis of 2008 was very much caused by a perverse series of (still legal) incentives that often made failed investments worth more than thriving ones. Our economy was like a town where everyone has juicy insurance policies on their neighbors’ cars and houses. In such a town, the driving will be suspiciously bad, and there will be a lot of fires.
AIG was the ultimate example of this dynamic. At the height of the housing boom, Goldman was selling billions in bundled mortgage-backed securities — often toxic crap of the no-money-down, no-identification-needed variety of home loan — to various institutional suckers like pensions and insurance companies, who frequently thought they were buying investment-grade instruments. At the same time, in a glaring example of the perverse incentives that existed and still exist, Goldman was also betting against those same securities — a practice that one government investigator compared to “selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars.”
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Time to change this city’s name to Bendover?
Most interesting change in their market: There was a huge increase in the number of sales this year, as their prices became more affordable. This shows that there is still demand for housing, when it is properly priced. Why our national leaders want to keep housing unaffordable and price out prospective household buyers is quite the mystery.
Of course, now that the first-time buyer credit is gone, there is a question of whether prices will have to fall still further to keep demand alive.
Bend leads nation in home depreciation
POSTED: Friday, May 28, 2010 at 03:22 PM PT
BY: Nick Bjork
Bend’s residential real estate market has been on a roller-coaster ride over the past several years, experiencing some of the nation’s fastest growing home prices followed by this year’s sharpest depreciation.
The ride has taken its toll on Central Oregon brokers. Even though they’re trying to remain optimistic, they say they’re wondering if the market has hit bottom yet.
The Federal Housing and Finance Agency last week announced that the Bend-metro area, which includes all of Deschutes County, has seen the nation’s largest drop in home prices over the past year, falling 23 percent.
“It’s been a vicious cycle over the past several years,” said Sheree MacRitchie, president of the Central Oregon Association of Realtors and the principal broker with Steve Scott Realtors in Bend. “At first we were at the top of the list for fastest appreciation. Then things peaked and we instantly went to the top of the list for depreciation.”
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Median annual home price and number of transactions in Bend city limits (April through March)
2005-06 $295,000 — 2,896 –
2006-07 $353,500 19.8% 2,018 -30.3%
2007-08 $334,300 -5.4% 1,318 -34.7%
2008-09 $256,600 -23.2% 1,118 -15.2%
2009-10 $204,000 -20.5% 1,660 48.5%
Data courtesy of Bratton Appraisal Group of Bend
YOY percentage changes courtesy of CIBT.
Sound Economy with Jon Talton
Veteran financial journalist Jon Talton blogs daily on the most important economic news, trends and issues involving Seattle and the Northwest. Read his regular column every other Sunday in the Seattle Times.
May 24, 2010 at 10:00 AM
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Today’s house sales numbers are hardly cause for celebration. The increase was heavily dependent on the federal first-time house-buyer credit from the federal government. The best we can hope for is that this is bottom. A huge inventory of unsold houses remains, a shadow inventory has yet to come on the market, many mortgages will reset this year and millions of house-owners are under water. The bubble is not coming back.
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