Bits Bucket For May 31, 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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Dealing with personal debt.
* Household debt fell 1.7 percent last year to $13.5 trillion, according to the Fed. It was the first annual drop, based on records going back to 1945.
* People on average carry around $44,000 in debt — mortgages, credit cards, auto loans and other consumer debt. That’s a far bigger load than in the early 1980s, when unemployment topped 10 percent. In 1982, per capita debt totaled about $14,000 in today’s dollars.
* At the same time, people are building up their savings — 4.2 percent of their disposable income last year, the most since 1998, the Commerce Department says.
How should the average household play the financial pinch? Talk of a coming burst of inflation suggests it might be clever to take on gobs of debt and pay it back with cheaper dollars. (The lender gets the short end of the stick.) But how does one know for sure his/her income is going to rise at the rate of price inflation so the lender can be repaid with all that “cheaper money”?
Another scenario promises that deflation will sweep across the landscape after the inflationary money bubble bursts, in which case the lender wins because he is paid back with more valuable dollars. It is the debtor who gets short shrift.
A clear illustration of this principle can be seen in real estate where price deflation is rampant. A person who took on a big mortgage in the belief his income would constantly rise and the value of his house would climb, finds the reverse is true. The value of his house has plunged and his income has not changed or may have evaporated.
“Household debt fell 1.7 percent last year to $13.5 trillion”
My last LL had his “Household debt” fall by $340,000.00 when the short sale went through.
Yeah, I was wondering how much of this was due to FC/SS/DiLs. When you add in CC companies becoming Slightly less willing to lend to just about anybody and it’s no surprise that peoples balance sheets are improving, even as the banks are in crisis.
He looks the whole world in the face for he owes not any man. ~Henry Wadsworth Longfellow
There are plenty of ways to get ahead. The first is so basic I’m almost embarrassed to say it: spend less than you earn. ~Paul Clitheroe
For our viewing pleasure - the history of this stat.
It’s great to see it going down. However let’s not pretend we’re anywhere close to a level that would be considered prudent yet. Household debt is still double what it was 10 years ago - which was double what it was 10 years before that!
“It’s great to see it going down.”
I agree, but probably for reasons that differ than yours.
Since money is loaned/borrowed into existence then a turndown of loaning/borrowing must mean that money is going out of existence, which means less money is left to circulate throughout the economy, which adds to the value - the buying power - of the money that is left.
Which means, in turn, that those with money - those with the cash - get to call the shots in any transaction.
At the core I think it’s the same reason really.
We need to get back to a sane economy - one that’s powered by production, not by debt. A such - those that are more fiscally prudent - generally those with more cash - should be the ones calling the shots.
Those that are too deep in debt should be Darwined out of existence - not physically mind you, but financially, e.g. via bankruptcy and a return (hopefully) to life as a producer and saver.
“We need to get back to a sane economy - one that’s powered by production, not by debt.”
That’s what I think is happening, I think the U.S. is witnessing/experiencing a generational sea-change.
It took us years for us to transition to what we have become and it will take us years to transition into something else, and this transition will involve a lot of financial pain for a lot of people. My goal as an investor is to make sure I am not one of them.
That sounds all well and good, but we bailed out AIG instead of helping CIT which provides credit to hundreds of thousands of small companies….what a colossal failure of the big Ohhh
We need to get back to a sane economy - one that’s powered by production, not by debt.
Getting back to production…well there’s the rub ain’t it? Back when we were “producing,” far more of our women were staying home with kids, oil came from Texas, India and China were funny pastel empty shapes on a map, and almost anyone could be hired for menial work after a week of looking without having to speak Spanish. Now we simply have too many people and not enough work to do. Or, more accurately, there are too many people and not enough money to pay Americans a living wage.
Even if we declared a national debt forgiveness and absolutely every underwater FB had his debt erased and was thrown from his house into an apartment, the FB won’t go far without a $40K job.
It took us years for us to transition to what we have become and it will take us years to transition into something else, and this transition will involve a lot of financial pain for a lot of people. My goal as an investor is to make sure I am not one of them.
Then you had better have a lot of gold. Paper money is not going to protect you from sovereign default and devaluation.
It’s growing exponentially with a 10 year doubling time — about 7 percent a year until the recent peak…
Just keeping up with population and inflation right?
Well, maybe not
BTW - I see the source of this is a recent WTOP poll. The data (household debt down vs. last year) isn’t new though - it came out back in March, and is for data thru Q4 2009. The next set of quarterly data comes out in 10 days.
“People on average carry around $44,000 in debt — mortgages, credit cards, auto loans and other consumer debt. That’s a far bigger load than in the early 1980s, when unemployment topped 10 percent. In 1982, per capita debt totaled about $14,000 in today’s dollars.”
That’s a lot of plankton to feed the whales of Megabank, Inc!
Haha, I’m watching “Maxed Out” streamed from Netflix. 2006 documentary, opens in Las Vegas with a realtwhore saying you can’t go wrong as long as you buy in a planned community.
What a scream…
I thought it was different there…
China Real Estate Bubble Bursts in Bond Market: Credit Markets
May 31 (Bloomberg) — Dollar bonds sold by China real estate companies this year are the worst performers among Asian non-financial corporate debt denominated in the U.S. currency amid concern the nation’s property market is overheating.
Yields on the $3.9 billion of bonds issued by Kaisa Group Holdings Ltd., Country Garden Holdings Co. and seven other developers since January widened by an average 2.26 percentage points relative to Treasuries as of last week, according to data compiled by Bloomberg. That’s more than the 2.05 percentage- point increase in spreads for the seven dollar-denominated bonds sold by other companies in Asia outside Japan.
It’s not very different, except they are maybe half a decade behind the U.S. in the timing of their real estate crash.
“China’s economic boom can survive a property bust”
Is anyone else reminded by that line of a favorite book title?
Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
~ David Lereah (Author)
2.3 out of 5 stars See all reviews (58 customer reviews)
58 Reviews
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9 new from $23.16 18 used from $4.71
China’s property market
Home truths
China’s economic boom can survive a property bust
May 27th 2010 | BEIJING AND HONG KONG | From The Economist print edition
A DISCARDED toilet bowl lies on a pile of rubble in Tongzhou, a Beijing suburb which is busily remodelling itself as a “modern” and “international” city. On one side of the railway, a string of single-storey dwellings, built of brick and tile, have yet to be demolished. Their occupants make the most of the surrounding debris, loading bent window frames onto the back of bicycles to be sold as scrap. On the other side of the tracks tower new blocks of flats, more than 20 storeys high, waiting for their first residents.
Tongzhou’s new flats are one example of the property boom in China, where 1.87 billion square metres of living space were under construction in the first quarter of this year, 36% more than a year earlier. The boom has resonated widely. Banks have expanded their mortgage-books briskly; local governments are filling their coffers by selling land to developers or to the “urban investment vehicles” they sponsor. Property and construction represent about 10% of China’s GDP, not counting the consumer goods that homebuying inspires, such as the quilts and curtain rails on sale in Tongzhou’s market.
Home prices in 70 Chinese cities rose by 12.8% in the year to April, according to China’s National Bureau of Statistics. That was a record, and probably an understatement. The bureau also counts the total sales value of homes—384.6 billion yuan ($56.3 billion) in April—and the floorspace sold (72.4m square metres). Dividing one by the other gives an alternative gauge of prices, which increased by almost 18% nationally in the year to April and by over 95% in Beijing (see chart 1).
But China’s policymakers seem determined to disappoint fortune-hunters. In April they imposed new curbs on housing speculation, raising down-payment requirements and mortgage rates. In some property hotspots, out-of-towners cannot get a mortgage until they have paid local taxes for at least a year. Buyers must make at least a 50% down payment on a second home, even if it is their first mortgage. In Beijing they cannot buy a third home, even with their own money.
The measures seem to be working. Stephen Green of Standard Chartered reckons that prices of new homes fell by over 20% on average in the first week of May in Beijing, Shanghai and Shenzhen, although he cautions that this may reflect the mix of homes on offer, as developers keep their best properties off the market for now. In Tongzhou, prices have fallen by 13.4% since mid-April, according to the Beijing Times. The worry now is that a bursting property bubble might do damage to China’s lenders, ruin local exchequers and cast a pall over its economy—and the countries which sell to it.
In China’s biggest cities, such as Beijing, Shanghai, Shenzhen and Guangzhou, prices did rise too far and too fast. To buy a 100-square-metre home in the capital, the average Beijing household must now spend 17 years’ income.
Across the country as a whole, home prices are nine times the average income of urban households.
…
“Stephen Green of Standard Chartered reckons that prices of new homes fell by over 20% on average in the first week of May in Beijing, Shanghai and Shenzhen, although he cautions that this may reflect the mix of homes on offer, as developers keep their best properties off the market for now.”
By the way, a one-week price decline of 20% occurs at an annualized rate of ((1-0.20)^52-1)*100 = -99.999%.
But not to worry — that rate of decline is clearly not sustainable for very long!
LOL - 20% in one week??? O….K….
I’m guessing either a sampling size issue, or major panic in the streets.
Greece urged to give up euro.
THE Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy.
The Centre for Economics and Business Research (CEBR), a London-based consultancy, has warned Greek ministers they will be unable to escape their debt trap without devaluing their own currency to boost exports. The only way this can happen is if Greece returns to its own currency.
Greek politicians have played down the prospect of abandoning the euro, which could lead to the break-up of the single currency.
Speaking from Athens yesterday, Doug McWilliams, chief executive of the CEBR, said: “Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight.
Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight.
Wha….??? This makes absolutely no sense.
If the debt went up directly due to the currency falling - wouldn’t the GDP also go up by the same amount?
Biggest problem would probably be social - if he thinks the drop would only be 15% he’s got another thing coming. History shows that when a small country with a heck of a lot of debt unpegs their currency they enter hyperinflation. See Argentina for instance.
However I agree with them that Greece should do that, in order to help their economy. Short-term there would be a lot of pain - long term they’ll be better off.
I should add - they also still need to get rid of their welfare state, that got them into this situation in the first place.
Rut roh:
http://malaysia.answers.yahoo.com/question/index?qid=20100505014118AAlM8XN
Greece is looking at an interest only loan at best.
You shouldn’t use the term “welfare” state, because that is a loaded term.
How about “early and long retirement state?” That’s more indicative of what their problem is.
How ’bout “Parasitism on the backs of the productive”?
I prefer the term welfare - it’s calling a spade a spade. When a person extracts more from the economy than they give - e.g. via huge pensions that are funded by others through the state, then IMO they very much are welfare recipients.
Probably can say the same for veterans too…
Its the 20 year and out that is so out of date…..my plan would be if you want to “retire” at 40-50 then you had better be retired, if you still want to work then no bennies till your 65
———————————–
then IMO they very much are welfare recipients.
my plan would be if you want to “retire” at 40-50 then you had better be retired, if you still want to work then no bennies till your 65
That’s a tough one…they’re being asked to do a lot. Whatever they’re given, I think it needs to be given proportionally to all service after the initial commitment. Many of the problems I saw in the military would be reduced significantly if people got 90% of the 20-year retirement at 18 years of service, etc.. Lots of people are forced to go along with things they otherwise would refuse to support due to having too much of their life invested to write it all off.
Carl:
This also applies to civil service, cops, firemen etc…if you are going to retire early well be retired, submit your tax returns each year to continue to collect your “retirement”.
So union contacts have to change yesterday to reflect our longer lives. Plus you all minimize the BIG effects of all the non smoking campaigns and higher cig taxes that i believe is not reflected in the payout equation.
Be careful what you wish for, people. Retirement for anyone under the age of 40 who is not independently wealthy is almost non-existent and anyone between the age of 40 and 60 is problematic at best.
ALL entry level new hires are getting NO retirement.
You do NOT want a nation of old people living in the street. Because their kids sure won’t be able to afford them either.
“ALL entry level new hires are getting NO retirement.”
Where - public? private?
“Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight.”
If Greece leaves the euro, it will simultaneously default on said debt valued in euros.
In Flanders Fields
In Flanders Fields the poppies blow
Between the crosses row on row,
That mark our place; and in the sky
The larks, still bravely singing, fly
Scarce heard amid the guns below.
We are the Dead. Short days ago
We lived, felt dawn, saw sunset glow,
Loved and were loved, and now we lie
In Flanders fields.
Take up our quarrel with the foe:
To you from failing hands we throw
The torch; be yours to hold it high.
If ye break faith with us who die
We shall not sleep, though poppies grow
In Flanders fields.
Thank you, Bill. I learned that poem as a pup, it still touches my heart.
I will admit to being partial to this:
Delinquent Elegies
for Keith Douglas (1920-1944)
John Smith (1923-1944)
My friend, John Smith, a usual man,
urging his bomber from the earth,
heard his life end in a loud bang
and took fire with his last breath.
Our engines idled through the necessary pause,
until his passion was extinguished.
Then the others of the squadron rose
into the morning, over John Smith’s ashes,
bombed, and at noon returned, most of them,
to the hut where, with one dropping eye,
the colonel drew the obvious lesson:
how not to fly.
No day could have been more ordinary
So much was burning in that bad time
that no one troubled to sing an elegy
for John Smith and his crew of nine.
That was almost forty years ago.
Now in the evening on our TV
the shining bombers climb and show
us how it was, is, and again will be,
while here, where only a desk lamp burns,
I rake old anguish to make my truth
and record at last some ordinary rhymes,
a late song for a long-dead youth.
My friend, John Smith, who, in the Second War,
blew up and burned, one among many,
a clownish hero, killed by error,
as smart as most, as brave as any.
Even this day, it makes my stomach turn to see blood poppies.
Wrong hoilday. This poem is associared with Armistrice Day or Remeberance Day aka Veterans Day in the US.
Thing one is back!
These observance days have evolved over the years. Memorial Day honors and remembers those who wore the uniforms and lost their lives during a war. The principal observance ceremony is at Arlington National Cemetery.
Veterans Day honors all vets, including those still living.
but I remember blood poppies in spring
What mikey did today…
I went to our local Wood National cemetry this evening after all the ceremonies were over and crowd were gone. I like it that way and visit when I can… even in the snowflakes. I’m hardcore and have mittens on a string.
It may not be Arlington, VA but you might think it was to see it or to hear “Taps” in the evening. The teriffic staff and volunteers are all fantastic and take great care and maintain the resting places of our 38,000 plus service men and women there among those beautiful trees, gentle hills and tiny valleys. Everyone has a US Flag and one of my old friends, in a small glade, even has his very own tall shady tree. Heck, I can’t even get a permanant spot in this place when I quit kicking!
I met one of the groundskeepers and stopped to talk to him and thanked him and everybody involved for doing such a wonderful job after most people had left. I had seen him before and he is a terrific guy and it was a pleasure to actually met and speak to him. We bumped into each other again as I was leaving and chatted again. There is no more room for burials for Jim, me or anyone else there but I just told him that I just planned to croak curled up to my buddies tree, hang on tight and absolutely refuse to let go !
We also joked about me perched on my favorite canon with both the robins and my thoughts hopping around and then said goodbye once more. I had no idea my new acquaintance had been there all day, been so active and had done so much more than he even mentioned to me. Talk about one nice, dedicated and very personable guy.
I was then totally delighted to see this newsclip and article with him when I got home this evening. I shall have to stop on day, say Hi and tell him that I saw him on Tee Vee.
If you have a few seconds, I’d like you to meet this decorated veteran, Jim, see our cemetery and if you watch carefully as Jim is speaking, you’ll see mikey’s favorite perch, the black Civil War cannon by the monument, as Jim is talking. That’s my canon robin!
Sheesh…Jim and my idiot canon get famous today, the robins got some bugs and all I got was a stupid black cherry soda !!
Seriously though, I hope that all of you and yours, all had a good and safe Memorial Day Holiday this Weekend. mikey
http://tinyurl.com/2ab7pu3
.
Thanks, Mikey. Backatcha!
Comment by robin
2010-05-31 22:44:12
Thanks, Mikey
Wow…my pleasure …HBB robin.
Government help annoys me so so much.
I am visiting New Orleans, and yesterday, I stopped by Walgreens to get some gum. There was a bit of a line to pay, and I overheard a conversation. Two people behind me were openly talking about their food stamps.. one guy was in his 20s… one guy was in his 40s or 50s.
The older guy said he loved getting his aid in a debit card because he could easily use it in Louisiana even though he was visiting from Florida. The younger guy was complaining about not being able to use his aid to purchase Monter (energy drinks).
I was so irritated; if you have the money to travel from Florida to Lousiana and pay for a hotel, you should NOT be getting financial aid for food.
I almost turned around and made a comment about it, but I held back…
A simple “you’re welcome” would seem to have sufficed.
As long as these guys are getting their trickle then the less incentive they have to riot. Take away their trickle and they’ll take to the streets.
Like it or not, food stamps help keep the peace.
The less incentive they have to work…
<i?The less incentive they have to work…
Who says they don’t (under the table of course).
Gaming the system has become the national sport. Until the money runs out.
When the money runs out the national sport may be rioting.
Food stamps aren’t for the poor
They are to keep the poor from rioting long enough for the elite to strip more wealth from teh middle class.
I do away with welfare and foodstamps and replace it with a works program.
Meatson:
Good in theory but it’s a Failure in actual practice. The biggest failure of the Back to work programs is it discriminates against smart people.
If you need a GED or looking for an entry level job and need to be taught English or those soft skills like setting an alarm clock, checking the traffic and subways, so you can get to work on time…it seems to work
The problem is when you are even decently educated they will not have any openings to do your “free work” in anything close to your field so at least you can put it on your resume.
The Big Ohhh sent 2500 new subsided pay jobs to NYC and yet 90% went to the parks dept. to clean up trash etc. What good would that do on your resume ???????
————————————————————–
I do away with welfare and food stamps and replace it with a works program.
Less than 4 pct of the population produces more food than we can possibly eat.
I don’t understand why this is so upsetting, particularly when most food subsidy programs are directed at women and children.
This is peanuts compared to the subsidies banks and homebuilders receive to keep housing prices inflated.
Furthermore, we’ve said it many times — this is a structural problem. Bubbles create malinvestment throughout the economy. As a result, we should not expect cyclical unemployment; we should anticipate long term structural unemployment and long periods of underemployment.
You have obviously never stood in line behind someone using food stamps. Hint: they use the money to buy things other than the food supplied by your 4%.
You never got back to me on how your ‘buy stock’ recommendation from last week panned out. Last Friday was quite the route for bovine brained investors, as I recall, and more are on the way, I’m sure.
They do? How do they do that? Most states have VERY strict rules on what can be bought and food is the ONLY thing on the list.
Exactly mrktMaven FL. Once again we see someone has either forgotten where the REAL welfare is or is a tool of those who don’t want us to remember where that TRILLION dollars went.
You probably saved your life by not reacting.
True. They looked kinda ghetto/rough
“Community organizers,” no doubt.
Brett, maybe the guy had a relative pay for him to come there for a job? Ever think of that?
As for the young kid, well kids is dumb. They are also suffering the highest UE rate.
Be DAMN glad you don’t need them. And learn to mind your own business.
“Be DAMN glad you don’t need them. And learn to mind your own business.”
Smartest statement read on this blog in months.
Thank you.
Thanks to all of you in the service.
Here in NYC, you’d never know a war was going on, unless you happened to be Downtown on 9/11. And even then, that is getting to be a long time ago.
Gee, what’s that big hole doing there?
I guess I don’t think of it that way.
Threats from radicals abroad would be at our doorstep if it weren’t for our guys in the field.
Bush’s invasion of Iraq created far more terrorists and extremists than it killed.
During the Vietnam War morons used to justify the unjustifiable by saying, “If we weren’t fighting them over there we’d be fighting them in Chicago” (or Peoria or some such place). Lies and stupidity. When we pulled out of the morass in Indochina “they” forgot all about us and turned on each other like scorpions in a jar. Vietnam invaded Cambodia. China invaded Vietnam. Communists were killing communists.
George Washington’s parting words should be remembered: “Avoid needless foreign entanglements.” Needless and ruinously expensive.
Agreed. And how does having boots on the ground in the middle east keep terrorists from sneaking across the porous Mexican border?
We’re only over there for one reason: oil.
I understand that but I’m on the inside of this whole damned thing. We’ve disrupted things in a major way and kept the mess mostly overseas.
Everybody wants to sit there with clean hands but I don’t see you all giving up your SUVs.
Or boats, wave runners, lawn mowers, weed wackers, leaf blowers, motorcycles, race cars, generators, RTVs, private aircraft…
Don’t even get me started on plastics and oils.
I don’t see you all giving up your SUVs
Speak for yourself kemosabe. I get 33 mpgs on my cars combined city/hwy commute.
“Bush’s invasion of Iraq created far more terrorists and extremists than it killed.”
That is one part of the Bush legacy which may live on for the duration of America’s future existence as a nation. Thank you very much, Dubya!
Had he had the guts to fight a religious Jihad and bomb thousands of mosques in pakistan afghani and iraq we would be safer since at Haj they would all be on their knees willing to die for allah….mission accomplished.
————————————
“Bush’s invasion of Iraq created far more terrorists and extremists than it killed.”
I wish I were a leftist. Life would be so much easier. No need to think just spew bumper sticker slogans all day long.
Bush bad. Oil bad. Wall St bad. Barrack good.
Ahhhh life is good.
This may well be, but it’s worth noting that the two most successful recent attacks against the U.S. - in 1993 and 2001 - were both planned long before Bush II’s tenure, and that we’ve had no successful attacks since the latter.
I believe also we’ve built enemies by our presence in Iraq and Afghanistan - but it’s hard to ignore those facts.
“I wish I were a leftist.”
I wish I were a liar and a straw man caricaturist. Life would be so much easier if I could just pretend things were however I imagined them to be, rather than having to face up to the harsh light of reality.
How is the Megabank, Inc PR gig going these days? It seems to me like the banksters’ PR has failed miserably, but I am admittedly somewhat of a biased observer.
But perhaps PR efforts are working better than I realize? After all, we haven’t heard of angry citizens marching on the government wielding torches, as in Iceland after their banking system collapsed, or of banksters getting chased around with pitch forks or getting tarred and feathered, or of any riot-induced deaths inside the walls of American banks.
Perhaps I am judging the bankster PR brigrade’s efforts too harshly?
Obama to use passage of financial regulation bill as a campaign issue
By Michael D. Shear
Washington Post Staff Writer
Friday, May 21, 2010
President Obama plans to use 1,500 pages of often arcane new financial regulations governing a highly complex industry in a populist Main Street message that could help boost his party’s political fortunes in November.
The campaign to make that case began even before the Senate passed the bill Thursday night. In a Rose Garden statement, Obama sought to make the connection between the financial legislation and the lives of everyday Americans and businesses.
“Wall Street reform will bring greater security to folks on Main Street — to families who are looking to buy their first car or their first home; to taxpayers, who shouldn’t have to pay for somebody else’s irresponsibility,” Obama said in a brief statement after the legislation cleared a key hurdle.
The message echoes the one Obama pushed after his health-care legislation passed. But whereas the fight over that issue left his party bruised and the law in need of a PR campaign, aides think the financial legislation remains highly popular with voters.
…
“Wall Street reform will bring greater security to folks on Main Street…”
Yes, if this were a reform bill. But it’s just so much window dressing, created obviously to play as a campaign issue. The banksters will be able to drive cash-laden semi-trailer trucks through the gaping holes and exceptions.
+1
He might as well have just said “Wall Street reform will bring greater sense of security to folks on Main Street…”
Sorry if this has been posted. I read it yesterday and thought it was interesting enough to share.
The Fishermen and the Tax Man
BP’s request for tax records poses a problem for some residents of fishing communities in southeastern Louisiana…
The first step for a commercial fisherman or coastal business seeking compensation for losses suffered in the oil spill seems simple enough: Submit copies of a commercial fishing license, proof of residence and tax statements.
But the request for tax records poses a serious challenge to some residents of close-knit fishing communities on the swampy edges of southeastern Louisiana, which for generations have harbored self-reliant nonconformists who don’t pay much heed to everyday rules and regulations.
In other words, they often get paid in cash — and don’t always report it.
Another man, who asked that his name not be used because he does not report income from selling hundreds of pounds of blue crab cooked each week in his garage, said he worried BP would turn over records to the Internal Revenue Service.
Rock, meet hard place! This quote from the article stuck out:
“The BP guy wanted my tax statements, but how can I pay taxes if everything I earned was in cash?”
www dot latimes dot com/news/nationworld/nation/la-na-oil-spill-claims-20100530,0,4758933.story
“The BP guy wanted my tax statements, but
how can Iwhy would I pay taxes if everything I earned was in cash?”Fixed that for him.
The tax regs are indeed rigged against the sole owner and single proprietor and HIGHLY favor all forms of incorporation.
Interesting article in today’s NYTimes: ‘Blacks in Memphis lose decades of economic gains’
Of course they would NEVER equate it with the loss of being able to read, write and speak English properly.
Must be Bush’s fault.
You said it; I guess you are probably right…
Ever been to Memphis? How could anybody tell there were actually any gains in the first place?
http://www.bloomberg.com/apps/news?pid=20601109&sid=a.xhR5iI4Gfs&pos=14
After losing $44 million since 2007, NEWSPEAK is up for sale. Oddly enough, it seems that Americans have a rising reluctance to subscribe to a “news” magazine that offers neither news nor truth, but rather corporatist pumping and politically correct Establishment propaganda.
The Internet is going to kill the newsmagazine as surely as it killed the newspaper. And why not? Magazines are too full of half-column fluff for $5.95, and anyone can get that online for free. Once in a while there’s a good magazine with in-depth reporting — The Economist comes to mind — but anything else is just not worth it. (and if you think newsmagazines are bad with the half-column fluff, don’t ever look at a woman’s magazine.)
The editor of Newsweek actually said the same thing about The Economist when Jon Stewart interviewed him a few weeks ago. Rolling Stone and Vanity Fair have some interesting pieces from time-to-time as well as articles on fashion, music and other lighter fare when you need a break from thinking about the mess we are in.
Weekly newsmagazines are also “time late” in our world. Even daily newspapers are 24 hours out of date: why read a magazine that’s a week out of date? The only thing newsmagazines are good for are long background stories and editorial content, and magazines like The Atlantic out-do Time and Newsweek on backgrounders.
Anyone seen or commented on the Matt Simons’ remarks re: BP spill being much much bigger?
Memorial day always makes my stomach turn at the thought of our endless wars that serve no good yet do much harm…draining our blood and treasure.
Of course the retort that the “insiders” know how effective the wars have been is irrefutable since they have perfect knowledge and I am just another spoiled civilian. Seems to me Somalia looks like a hot bed of nascent terrorists….I don’t see much interest in attacking there.
Re: SUV driving Americans
I have yet to get a positive response from friends /acquaintances at the suggestion that the USA should prohibit passenger vehicles from having more than 3 cylinders. i doubt that a picture of the Gulf of Mexico, covered in jet black oil from texas to florida, would change people’s minds.
Shanghai closed at the low, down almost 2 1/2 %. Looks like a rough open for the US on Tuesday. Are Goldman and the Big Hedge funds really piling in on the long side?
Limiting cylinders is dumb. Cylinders can be made as big as you want to make them. CAFE was only semi-dumb…the biggest problem with it is that they made the loophole for “commercial” vehicles which immediately made people want to buy even less efficient “commercial” vehicles for personal use. The tax credit for them just added insult to injury.
The only real solution (and of course it’s politically unacceptable just like most real solutions) is to use taxes to jack up the price of gas enough to change people’s behaviors. If it were done by an honest government who used those tax revenues in a way that allowed a reduction in other taxes it would work out nicely. If only.
The only real solution (and of course it’s politically unacceptable just like most real solutions) is to use taxes to jack up the price of gas enough to change people’s behaviors.
Why are we only focusing on gasoline here? Sure, there’s a lot of room for people to cut back, but oil is used in so many things..what about plastic grocery bags? plastic food containers? forks and knives?
Anyone bitching about me driving a 4WD vehicle better be bringing reusable bags to the supermarket/target/etc, and only buying glass and metal products.
Seriously…it’s so easy to say “You don’t need an SUV”. If I’m more efficient about the trips I take, and make sure I live close to work so I don’t have a long commute..you’re saying I don’t deserve the freedom of choice, but if someone has a sedan that gets 24mpg, that’s okay, even though they commute 75 miles a day and take a trip to the store just to get one item?
Carl’s suggestion makes sense - tax usage, rather than allowing/disallowing certain choices. Just make the cost of the choice bubble up all the way to the end user. This includes gas as well as any other petroleum products.
Really, that should be the case for any products at all - INCLUDING hybrid vehicles. The environmental cost of the manufacturing, disposal, and replacement of the batteries should be borne by the buyer, IMO.
Moreover, I buy goods grown/manufactured locally when possible, both to support my local economy as well as to ensure as little energy went into transportation as possible. I pay more for organic food items not because it’s healthier, but because it means that petroleum-based fertilizers weren’t used.
It frustrates me to no end that people want to take away others’ freedom of choice (to drive an SUV, or 8 cylinder sports car) as a quick “fix” to a problem.
When it comes to choices, I wish people would mind their own business. If there’s a hidden cost to petroleum usage, then just pass it on in the cost at the consumer level, and make it not hidden anymore. Then let everyone decide if they can afford it/it’s worth it. Don’t try to tell others what they can and can’t do.
I’ve thought about - and looked into - the “buy local” thing. Here’s the problem - it can actually cause more energy usage rather than less, due to economies of scale. Huge farms generally produce things way more efficient (less energy usage) than do local farms; often more than offsetting any additional energy get get them to further-away markets. I remember reading some article where someone did an in-depth study and found that in at least one case it used less energy to buy some produce (I forget what it was - wish I could find it) that was produced in Australia and shipped to the U.S. than it was to buy the same item from a local farmer!
I’m torn on it still, since it is really good to support local businesses. But be aware that it may not help the environment at all - it may hurt it in fact.
Here’s an article on the subject that includes a reference to the study I was thinking of - actually it wasn’t Australia and the U.S., but rather New Zealand and the U.K.
Food Miles
I also read that it uses less gas to move something from China to Long Beach than it does from Long Beach(?) to Cleveland, because sea travel is more efficient.
But be aware that it may not help the environment at all - it may hurt it in fact.
Would love if you could find the original article…
If true, I wonder how much of that is a function of cheap oil…if the cost of petroleum wasn’t subsidized by our “defense” budget and foreign policy, how would things compare?
Would love if you could find the original article…
If true, I wonder how much of that is a function of cheap oil…if the cost of petroleum wasn’t subsidized by our “defense” budget and foreign policy, how would things compare?
See above. The study done wasn’t based on cost, but on the amount of fossil fuel consumption.
I also read that it uses less gas to move something from China to Long Beach than it does from Long Beach(?) to Cleveland, because sea travel is more efficient.
Wouldn’t surprise me at all - a ship can carry a heck of a lot more containers than a train (or a single truck of course), has a lot less friction, doesn’t have mountains to go over, doesn’t have roadways to contend with, and probably has a lower-paid crew.
Though it’s a bit moot for most of the country, in terms of buying decisions. If you’re in Texas buying something from China it has to come both by ship and by train or truck, not instead of.
I’m very dubious about that study. The “factor inputs and externalities” sound like a bunch of subjective crap that you can manipulate until you get the numbers you want. Less fertilizer, herb/pesticide, water use on large factory farms? I’ve often read and heard quite the opposite- monocultures require higher levels of all three.
“Renewable energy applications, means of transportation (and the kind of fuel used), the amount of carbon dioxide absorbed during photosynthesis, disposal of packaging, storage procedures and dozens of other cultivation inputs.”
Give me a break, are we supposed to believe local farmers use more packaging than someone shipping something across the world? The guys at the farmers market use almost no packaging at all. “Carbon dioxide absorbed during photosynthesis”? Once again, give me a break.
I’m not buying that study- I’ll leave that to agribusiness and their endowments.
Hello All,
Not sure where the discussion was going on Oil/gas use. The department of Energy has lots of easy things you can look up.
#1 is fuel for transportation
#2 is diesel type products
Plastics are in the noise on use.
We are off 10% from the peak a couple years ago.
No, the real solution would be to make oil so unattractive and unprofitable, that the energy companies would finally have an “incentive” to unmothball all the alternative energy patents they bought up and hoarded years ago.
Lola,
Issued patents are a public record document. They are all available on-line at www uspto gov . In years past people could “hoard” patent APPLICATIONS as “submarine” patents, but the change to patent terms of only 20 years after ORIGINAL filing pretty much controls the use of submarine patents.
I’d like to see some of these patents…could you perhaps post the patent numbers held by oil companies?
People who believe in 100 mpg automobiles have never taken physics.
Mine gets 100 mpg ever day.
…o n the downhill portions at least. As long as I don’t go uphill - no problem!
FWIW - there are some motorcycles that can approach 100 mpg - but only the very small and low-power ones, and only on the highway. With a vehicle that small even a single person’s body weight makes a huge difference in gas mileage. E.g. the Honda Unicorn gets about 100mpg - but only has a top speed of 62mph.
I was surprised when I was talking to somebody who rode on a regular basis and she said that it took more gas for her and her husbund to ride two motorcycles than it did to drive together in a car.
Yes, 100 mpg is a silly dream. But I remember reading that most of the technology making engines more efficient has, in the end, been used to provide more horsepower rather than more efficienty. The average horsepower for personal vehicles is much greater than it was 30 years ago.
After WWII the British government limited cylinder bore diameter - and not overall displacement - in an effort to limit petrol consumption. This led to engine designs with way long strokes and tiny bores….just what you DON’T want for efficiency and engine life. Those long stroke cranks wore out in 40K miles.
Like Lower mass transit fares…I wouldn’t mind paying $5 gal..since i drive so little nowadays but a 50% reduction in my metrocard would save me a lot more then the extra gas tax.
Or building more subways, light rail like our 2nd ave subway desperately needed 20 years ago and still way behind any schedule they release.
If it were done by an honest government who used those tax revenues in a way that allowed a reduction in other taxes it would work out nicely. If only.
Is there ever an issue that liberals can solve without raising taxes?
We have two choices. Live in the 21st century and accept an oil spi as the cost of doing business. Or live in the 19 th century.
Does the Joshua Tree Extension work to zap Eddie’s comments? I am thinking of installing it…
Does the Joshua Tree Extension work to zap Eddie’s comments?
Yes, it would in fact allow for that. It’s kept me from reading all kinds of partisan comments over the past year and a half or so…
oops…I hope I’m not one people zap. I may post some dumb comments but I know better then to be partisan…I wish they had none of the above on ballots.
We have two choices. Live in the 21st century and accept an oil spi as the cost of doing business. Or live in the 19 th century.
No, I don’t think those are the only two choices. People used to spend a lot of time and energy building pyramids. Then they realized this was a pointless activity and gave it up. Does that mean they regressed to a more primitive era?
If you’re calling me liberal you’d be the first. I’m just recognizing the reality of “if you want less of something tax it more”.
“If you’re calling me liberal you’d be the first.”
Name calling is a troll’s first line of offense. Straw man miscaricature is the second. Posting completely off topic partisan rants is the third. And so on.
I have yet to get a positive response from friends /acquaintances at the suggestion that the USA should prohibit passenger vehicles from having more than 3 cylinders.
Government policy CREATES demand for oil, by building and maintaining roads, bridges and railroads.
By forcibly confiscating land and taxing money away from more productive uses in order to build this “infrastructure”, the government encourages people to transport goods over long distances, instead of manufacturing them locally.
What’s hilarious is how the big government set is always flogging all this “investment” in “infrastructure”, but is then horrified when people actually USE the infrastructure and thereby squander huge amounts of energy resources. Then they call for even more government intervention.
Mass transit is not the answer, that’s just another one-size-fits-all money-draining boondoggle.
A much better approach would be to get government out of transportation and energy entirely, and let people make their own decisions about travel and manufacturing.
Thank you! I haven’t seen that view on transportation in quite awhile. Yes, government uses eminent domain to take over houses in neighborhoods and tear them down to build freeways. Toll roads are very rare, so you cannot blame private enterprise for congestion and sprawl. Congestion, pollution, and sprawl are all the fault of government spending on trasnportation.
Drumminj is correct about oil’s uses though: Shoes, belts, PCs, iPads, TVs, plastic bags, toys, pesticides, cleaning products, containers for cleaning products, and so on are all oil-based products. Outlawing cars won’t stop the huge dependence on oil.
Hey all. I’ve updated the Joshua Tree Extension and currently have a beta version available for download on the web site. I’d appreciate people giving it a try.
Link to downloads page: http://mysite.verizon.net/drumminj_tx/download.html
The new features are:
* Added drop-down menu to toolbar with links to HBB search page and the JT Extension home page
* Cleaned up popup menu interface for adding and removing users from the ignore list - simply pop up on the user’s name at the top of their post
* Added option to open all links in comments in a new window or tab (on by default)
* Changed timing of when comments are marked as “read”. Rather than marking all as read when the web page is loaded, comments are only marked as read when you navigate to them via the ‘Next’ button
* Added popup menu to ‘Next’ button with option to mark all comments as read
And, as always, those who use the extension and want to show support, please donate to Ben on my behalf. The extension is only useful if this blog keeps running!
drumminj - I’m not seeing the “mark all comments as read” pop-up.
Are you popping up on the “Next” button when you have comments left to read? The button gets disabled if there are no more comments, and as such the popup won’t come up. Could be a windows vs mac thing though - I use and develop on a mac.
If you do have unread posts, and still don’t see the popup, please send me an email and I can try to sort it out. Works fine for me here, though
I’m using a PC. I haven’t rebooted though did restart Firefox. I can try tonight on my Mac.
Did you try right click on the Next button? That’s what I do to get it to pop up.
Did you try right click on the Next button?
(hangs head sheepishly)
nnoooooo……
OK - that works. I was expecting something to pop up just by mousing over it - didn’t even think to right-click on it.
Never mind!
Don’t feel bad, I went through the same thought process :-).
40 of 42 people found the following review helpful:
5.0 out of 5 stars Funniest Book Ever Read, April 10, 2008
By Joseph Covell
This review is from: Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
Lereah is a master of comedy. Often while reading Mr. Lereah’s tome i became overcome with laughter, sometimes experiencing convulsions. The convulsions were so severe that I would need to rest for shortness of breath. Thanks for your service Mr. Lereah, you’ve made a significant contribution. This books identifies you as one of the few who were ahead of the curve on the mortgage and credit issues we now confront. Also, I miss your hilarious monthly commentary on new & existing home sales–somehow you were always able to find a silver lining. Proud of you!
Don’t forget to read on your link the comedic rave review of Lereah’s book by David Berson, Chief Economist, Fannie Mae.
Credentials you can believe in.
(snort)
Amazon has some great reviewers opining on their financial bullsh!t tomes. Here is another one:
Customer Review
72 of 85 people found the following review helpful:
5.0 out of 5 stars A Prescient Mind - Spot On!, October 24, 2008
By von Mises
This review is from: “Dow, 30,000 by 2008″ Why It’s Different This Time - Second Printing (Paperback)
What a brilliant, insightful tome on investing cycles. The author makes an iron clad case as to why the Dow will skyrocket to the stratosphere by 2008. I can find NO FAULT in his logic. Leverage is the key to success in this world of ours. Everybody should borrow against ANY asset that they have, especially their home, up to 30 or 40 times the fair market value. As everyone knows, homes NEVER decrease in value.
Not every review of the financial tomes available on Amazon offers a five star rating:
75 of 75 people found the following review helpful:
1.0 out of 5 stars
Author’s Mutual Fund Now Out of Business, July 31, 2006
By observer22
This review is from: “Dow, 30,000 by 2008″ Why It’s Different This Time - Second Printing (Paperback)
the author is an intelligent fellow with a gift for writing, it is just that he was completely wrong on everything. Like Robert Loest (whose IPS Millennium fund was folded into another fund family after it shrank in size), Zuccaro was a permanent stock market bull who evidently could not see what was really happening to the market. Now his two mutual funds are out of business and this can join Glassman’s Dow 36,000 and David Elias’ Dow 40,000 as unintentionally hilarious reminders of not to take financial TV network CNBC seriously.
The reviews of Lereah’s book on Amazon are a microcosm of the violent intellectual struggle that has played out in recent years between true believers in the bubble and the skeptics.
Guess what, folks? Turns out the skeptics were right, and the true believers in the bubble were fools.
Nonetheless, I almost shed a tear for Lereah when I read some of the brutally honest negative reviews of his book. Here is my favorite:
44 of 45 people found the following review helpful:
1.0 out of 5 stars HA HA HA HA HA, January 10, 2009
By Surely This - See all my reviews
This review is from: Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today’s Expanding Real Estate Market (Paperback)
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
*gasps for air*
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
HA HA HA HA HA HA HA HA HA HA
ha ha ha ha
ha ha hee hee hee
heh heh
*wipes tears from eyes*
Seriously though, does Amazon.com sell tar and feathers? I know they’ve got pitchforks.
This book might be well worth the price below $7 — two McDonald’s meals worth of paper money!
The Housing Boom and Bust: Revised Edition (Paperback)
~ Thomas Sowell
(Author)
4.5 out of 5 stars See all reviews (117 customer reviews)
117 Reviews
5 star: (92)
4 star: (10)
3 star: (3)
2 star: (4)
1 star: (8)
List Price: $15.95
Price: $10.85 & eligible for FREE Super Saver Shipping on orders over $25. Details
You Save: $5.10 (32%)
In Stock.
Ships from and sold by Amazon.com. Gift-wrap available.
39 new from $6.26 14 used from $5.96
Just ordered me a copy. Was tempted to buy Lereah’s book, too, but opted for a new pair of Speedo water shoes instead to qualify for the free shipping. I will buy Lereah’s book when it eventually goes on sale for $0.01.
With all these banks running out of money they threw away on bad real estate investments, I would think there would be good opportunities for savers to profitably lend them money going forward, provide the banks can prove their credit worthiness.
Of course, given banks’ recent track records, perhaps a prudent saver’s wisest financial move is to just stuff her money under the mattress, rather than risk loaning it out to banks that have proven their skill at throwing away money on bad real estate loans.
E.C.B. Says Banks at Risk From Slower Growth
By JACK EWING
Published: May 31, 2010
FRANKFURT — Despite recent improvements in the health of European banks, they remain vulnerable to a daunting array of hazards that are expected to produce another round of sizable write-offs during the next couple of years, the European Central Bank said Monday, in a report that catalogued in alarming detail the problems facing the region’s financial institutions.
The challenges for banks in the euro zone include exposure to a weakening commercial real estate market, hundreds of billions of euros in bad debts, economic problems in East European countries, and a potential collision between the banks’ own substantial refinancing needs and government demand for additional loans, the E.C.B. said.
In its twice-yearly review of risks facing the 16-country euro zone, the E.C.B. expressed particular concern about banks’ need to refinance an estimated €800 billion, or $984 billion, in long-term debt by the end of 2012.
Borrowing costs could rise as the banks compete with governments in the bond market, “making it challenging to roll over a sizable amount of maturing bonds by the end of 2012,” the report said.
…
Owners Stop Paying Mortgage … and Stop Fretting About It
New York Times
by David Streitfeld
May 31, 2010
ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of.
Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.
“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.”
[...]
The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.
“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.
http://www.nytimes.com/2010/06/01/business/01nopay.html?src=busln
If the property taxes are not being paid why doesn’t the county forcibly move these crooks out on the street and sell these homes on the courthouse steps?
Gold is off to the races for the summer investing season!
Global stocks not so much.
Now that everyone is so durned bleakly pessimistic, would this be a good time to buy the dip?
June 1, 2010, 12:01 a.m. EDT
History paints a bleak picture
Eerie parallels between current and previous major bear markets
By Lawrence G. McMillan
MORRISTOWN, NJ (MarketWatch) — While the market never completely repeats itself, there are major similarities between past severe market dislocations and the current one.
We’ve been tracking the parallels between 1938-1939 and 2009-2010 in our newsletters and lectures for some time now. In addition, we’ve made some references to longer-term parallels between the current markets and those of the past.
…
Let’s tar and feather both of them. We can catch the tar as it shoots straight up out of the bottom of the Gulf of Mexico.
David Weidner’s Writing on the Wall
June 1, 2010, 12:01 a.m. EDT
Who’s the biggest jerk CEO?
Commentary: Bungled moves overshadow finance woes
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — Tony Hayward is Lloyd Blankfein’s new best friend.
For months, Blankfein, chief executive of Goldman Sachs Group Inc. (GS 144.26, -0.69, -0.48%) has been the CEO ALTH (America Loves To Hate). He’s been defiant before Congress, unapologetic, a defender of ruthless Wall Street practices, invoking God and bare-knuckle capitalism in the same breath.
His firm has been accused of betting against clients, masking Greece’s debt problems, taking backdoor bailouts through American International Group Inc. (AIG 35.38, -1.08, -2.96%) and good, old-fashioned fraud.
Enter Hayward, the bumbling, stumbling chief executive of BP PLC (BP 42.95, -2.43, -5.35%) , and the man ultimately responsible for the disaster that began April 20 on Deepwater Horizon in the Gulf of Mexico.
Hayward’s BP is blamed for 11 dead workers, an environmental catastrophe, a slow and inadequate response and insensitivity to the havoc his company has sprung upon nature and the livelihood of those on the Gulf Coast.
In his own way, he’s supplanted Blankfein as the nation’s, and perhaps the world’s, most hated CEO. But that’s the impression. To get scientific results we need a “tale of the tape” to measure just which CEO is really the biggest jerk.
Who’s the biggest jerk CEO?
…
Just did a little Southern Coastal Cali search on RedFin dot com. I learned a thing or three:
1) There is no shortage of SFRs for sale in SoCal coastal communities.
2) They are all priced at $200/SqFt+, and most for much more.
3) There are not enough millionaires on the planet to buy this many million dollar plus homes!!!