Bits Bucket For June 5, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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The petition comment of the day:
‘Stop artificially propping up house prices! History will show this was a crime.’
Why can’t AIG just borrow more “stimulus” dollars to pay back the debt, or just claim they paid it back like GM did (Gubmint Motors) problem solved, next. Everyone knows you get rich by borrowing, and not repaying.
AIG repayment prospects fade.
NEW YORK (CNNMoney.com) — Taxpayers have lent AIG $132.6 billion, but getting that money back is looking less likely.
The sale of AIG’s Asian life insurance unit for more than $35 billion would have helped a lot, but the deal went bust this week when the buyer, Prudential PLC, sought a lower price.
Now the troubled insurer is essentially back to square one with its repayment strategy — though AIG Chief Executive Robert Benmosche remains upbeat about the options regarding AIA, and maintains that AIG will pay back its loans in full.
States Shrink ‘Unaffordable’ Benefits to Bridge $1 Trillion Gap.
(Bloomberg) — Janet and Mark Hartmann, a New Jersey couple with 68 years of government jobs between them, may retire ahead of plan because the state is $102 billion short of funds needed to pay all the benefits it owes.
New Jersey and 20 other states are urging early retirements, cutting benefits and demanding employees contribute more in the face of what the Pew Center on the States says is a $1 trillion gap between available assets and what’s owed workers.
Declining tax revenue has left governments unable to make up the $724 billion of market losses suffered by the 100 largest state retirement plans in the two years that ended last June, according to the U.S. Census Bureau. Some states have skipped payments to retirement accounts or borrowed to make them, endangering their credit ratings.
“This, in my opinion, is the public issue of this decade,” New Jersey Governor Chris Christie said at the Manhattan Institute for Policy Research on May 25. “Things that used to be sacred cows, that used to be the third rail, no longer are. They’ve been replaced by the unaffordability, absolute unaffordability.”
“Janet and Mark Hartmann, a New Jersey couple with 68 years of government jobs between them, may retire ahead of plan because the state is $102 billion short of funds needed to pay all the benifits it owes.”
I cannot think of a greater reason for the Hartmanns NOT to retire than this. They have 68 years of seniority between them, this seniority is an asset, a job security asset that cannot be replaced.
If the Hartmanns were to retire then their cash flow would be determined by the retirement benifits offered by the state, benifits that are most likely destined to be reduced. If they keep working then their cash flow will be kept up by what their jobs pay.
Since they have job seniority they will probably be last in line in having their wages cut, if it comes down to that.
“if it comes down to that.”
If, if’s and buts were chips and nuts we would all have payed for houses and big fat pensions at 50. Just saying.
“big fat pensions at 50″
Greece chose 52 as the retirement age, with a state pension. That seemed to work really well for them!
It’s 38 if you’re in the U.S. Army, Navy, Air Force or Marines…if you started at age 18, that is.
“I cannot think of a greater reason for the Hartmanns NOT to retire than this. They have 68 years of seniority between them, this seniority is an asset, a job security asset that cannot be replaced.”
This couple are likely PERS-1 beneficiaries. Golden years ahead!
I would advise the Hartmanns’ to take the money & run.
Run to where?
Run to where?
Good question. Brazil would let them in if:
1. They could show 250K in semi-liquid assets.
2. and/or 2K a month income.
3. Had a clean criminal record.
4. They acted like they hated W when he was president.
But at their age, the transition to Brazil would be almost too much for them to handle. However 6 months in a cheap mid-west town and 6 months on a beach in Brazil or Central America is doable. (for awhile)
What I meant is where to run with the money, where to put the money, so that its safety would be secured over the thirty-forty years of retirement.
When one is retired the amount of his income is determined by investments, either directly or indirectly (an insurance company, mutual fund, etc.).
If one continues to work then his income is determined by his wages. Wages translates into continuing steady cash-flow. Cash flow generated from retirement funds may or may not be steady or be continuing.
I didn’t mean to literally run somewhere.
My belief is our present system is unsustainable. Any revenue shortfall will be made up through QE. Unless we can exhibit some self control and pull the crack pipe from our lips Mr. Market will do it for us. We are rent-a-cops for a corrupt regime in Saudi Arabia. We are also the largest consumer of Chinese crap. These sovereign lenders have a vested interest in keeping this charade going. When the problems in their own countries become insurmountable and/or they realize it no longer makes sense the lending stops. Then the charade unravels at light speed. Thus my belief in converting pictures of dead presidents into something tangible.
Who really knows? I may be right, I may be wrong. Either way I end up with things I’ve always wanted anyway while continuing to forgo all debt.
YMMV
what is QE?
“what is QE?”
Quantative Easing: Go here: http://en.wikipedia.org/wiki/Quantative_easing
Heck, just one trillion?
Didn’t the Fed just print up over a trillion to buy up mortgages?
Why not print up an extra trillion and make all the pension issues “disappear”?
/sarcasm
See how well that worked in Zimbabwe…..
Articles like this make me realize that with 401k and IRA accounts, at least you know the money was funded into the account.
Pensions? It appears to me that counter-party risk is emerging larger and larger with the passage of time.
Always was, poindexter!
You’re just late to the “realization” party.
Also true of insurance and annuities.
Many private Defined benefit plans are funded with near real-time contributions. Generally not 100% but sometimes very close. Of course with the recent investment returns the funding levels have dropped.
I am a member of one of these plans.
Are you certain that the employer-matching contributions to the 401(k)’s are all fully-funded, or are these also paid with “future wishing dollars”?
how could they not be fully-funded? They’re deposited in your account, at the same time the funds deducted from your paycheck are…
About FREAKIN time we got 1 politician who states the truth…..as you know this was my rant for quite a long time .
——————————–
“Things that used to be sacred cows, that used to be the third rail, no longer are. They’ve been replaced by the unaffordability, absolute unaffordability.”
What he doesn’t say is that the previous administrations tapped the ‘overfunded’ pension system for the cash (read: raided the piggy bank) and sold bonds to repay the ‘borrowed money’. Now the chickens have come home to roost and the pension system needs that money back. Chrisitie just doesn’t want to pay it back, much like the FB’s we keep ranting about who find themselves underwater on their debts.
The FDIC is or will be over drawn soon. Gonna need mo money.
Regulators shut banks in Nebraska, Mississippi and Illinois; 81 bank failures so far in 2010.
WASHINGTON (AP) — Regulators on Friday shut down a Nebraska bank that has struggled under the weight of soured loans and drawn scrutiny from federal authorities since early last year. Two small banks in Illinois and Mississippi were also shuttered, boosting the number of U.S. bank failures this year to 81.
The Federal Deposit Insurance Corp. took over TierOne Bank, based in Lincoln, Neb., with about $2.8 billion in assets. Great Western Bank, based in Sioux Falls, S.D., agreed to acquire the assets and deposits of the failed bank. In addition, the FDIC and Great Western Bank agreed to share losses on $1.9 billion of TierOne Bank’s loans and other assets.
The failure of TierOne Bank is expected to cost the deposit insurance fund $297.8 million.
I see nothing there that a little Fed balance sheet expansion cannot fix…
Mr. Bernanke`s Neighborhood
It’s a beautiful day in this neighborhood,
A beautiful day for a neighbor,
Would you be mine?
Could you be mine?
Would you be my neighbor?
Hello boys and girls.
Can you say quadrillion?
Sure you can, I knew you could.
quadrillion
“Don’t cry for me, Tear One Bank Co!”
It’s easy to get rich when you control/own the treasury, the ‘federal’ reserve and con-gress. Anyone holding out hope that this will ‘change’ is delusional. This crowd rules the money world.
Six Giant Banks Made $51 Billion Last Year; The Other 980 Lost Money.
An oligopoly of Goldman, BofA, JPMorgan, Morgan Stanley, Citi and Wells Fargo is flourishing. (Forbes)
Focus hard on this shocking Wall Street reality: The top six bank holding companies earned an aggregate of $51 billion in pretax income in 2009. We’re talking about JPMorgan Chase, Goldman Sachs, Bank of America, Morgan Stanley, Citigroup and Wells Fargo.
All of this pretax income can be attributed to their trading revenues of $59.7 billion. The proprietary trading operations of an oligopoly of banks, saved from disaster by Uncle Sam’s largesse and subsidized with cheap money from the central bank, was the single driving force behind the restoration of their fortunes and the renewed surge in their stock prices.
“… subsidized with cheap money from the central bank …”
Borrow money from Uncle Sam at zero percent and lend the same money back to Uncle Sam at three percent. And collect hefty fees for doing so.
“… was the single driving force behind the restoration of the their fortunes and the renewed surge in their stock prices.”
Now that their stock prices are rising now might be a good time to print up some new shares to distribute to Joe Sixpack and use the proceeds to puff up the balance sheet.
“An oligopoly of Goldman, BofA, JPMorgan, Morgan Stanley, Citi and Wells Fargo is flourishing.”
Megabank, Inc is too-big-to-fail-to-flourish (TBTFTF).
Hey, Cantankerous, didja buy the dip yesterday? Or will you be waiting to see if there’s more of a dip on Monday?
I am not a dip buyer.
Wait long enough and you’ll get to buy the canyon.
Mind boggling here in the local San Diego Tribune business section that they do not have one article of the market dropping over 300 points yesterday.
Nah, it was more newsworthy to have on the it’s biz front page that more people weren’t applying for the discounted power from San Diego Gas & Electric.
Is the PPT editing what goes into the daily rags now?
Is the PPT editing what goes into the daily rags now?
You mean the corporate owned media doesn’t report the facts?
wait long and you will miss buying in the canyon. Dollar Cost Averaging wins.
Shouldn’t this be a question for Green Shoots?
Still no explanation for the flash crash. All we know is a privileged few TBTF banks did not lose a single dime on any given day during the last quarter, batting 100 pct for 90 days at bat, a statistical impossibility by all measures.
Not to mention, the carnage in the ETF space.
I continue to be amazed at the number of new listings coming on the market, on Long Island, since the end of the tax credit. Most of it priced high. I’ve seen a few price reductions recently, on houses that have been on the market for at least a few months. Some of these reductions are down to what people paid several years ago. Their the exceptions though. There seems to be a new wave of tapped out homeowners reaching the end of their rope. The subprime borrowers were always on the edge, only needing a small hiccup to push them over. The next wave seems to be people who had the resources to hold on longer, but are nearing the end. With inventory rising and buying activity drying up, you can almost feel the pressure rising.
The tax credit seemed to wring out the suckers who would buy in a rigged market. The only thing I see motivating potential new buyers are lower prices. With the economy slowing down again, even lower prices may not help activity much.
“With the economy slowing down again, even lower prices may not help activity much.”
Yea, and how long will it take for the sellers to realize they need to lower the prices?
I have been guessing two years to “hit bottom” here in north Phoenix but I’m starting to think even longer considering the economy.
It must be time for Stimulis Redux.
“I continue to be amazed at the number of new listings coming on the market, on Long Island, since the end of the tax credit. Most of it priced high.”
It could be illusionary:
High priced new listings might now be coming on the market at roughly the same rate they were before the end of the tax credit, but no longer are selling at the same rate due to the vaporization of tax-credit-fueled demand. Hence they sit on the market unsold, giving the visual impression of a large number of new listings.
If Vmaxer is like me the first thing I do every day is search new listings. I see the same thing happening in my area w/the higher priced properties coming on now which is the typical end of school season when most new inventory hits the MLS. I think the realtors probably coaxed sellers to come on early in the price niche that the tax credit would most impact. That niche is pretty much tapped out here and I’ve probably seen only 1-2 new ones come on since the elimination of the credit.
What’s the obsession?
Prices aren’t likely to be rational till 2013 or 2014.
Why not sit back, put your feet up, and have a double whisky? (substitute by tipple of choice which includes everything from limeade to buttermilk.)
Buttermilk with cornbread, please.
Cold buttermilk.
Roidy
They won’t be rational till the US government and the Fed stop spending trillions to buoy housing prices.
But in the end the price will find its own level. Wonder if Shakespear is required reading for fed officals? Because all tragedies have similar endings.
We’ve got a home originally priced over $1mil that is looking abandoned. It is in a very desirable area but the rest of the street is not that price range. It’s on a street where another home that started in the $600k’s (with a $20k+/yr tax burden has sat for well over a year). We’re very heavy in the $500k to $700k inventory bracket for a market w/only 200+ homes a season.
The avg sales price in the area has been around $250k for well over a year. Just a reminder: I’m in cny and these $200k range sold homes are 1800 - 2500 sq feet on 1/3 to 1/2 an acre. The homes are generally 25 -50 years old, although the village sales are much older. The $500 - $700ks are either tricked out 3500 sq footers or 5000+ sq footers on a multi acre parcels. Some are selling. It is not a complete freeze out but housing supply vs demand in this town is way, way off. I know from talking to realtors there are many people sitting it out waiting for more $200k ish inventory. What will happen to these larger homes as most income groups size down?
Will you be buying @nal lube now or later?
I didn’t observe the first housing stimulus.
Most properties sold with little concessions and moderate price reductions during the second stimulus.
Most foreclosure properties sold with moderate concessions and moderate price reductions during the third stimulus. Short sales had the biggest price reductions, probably due to a lack of concessions.
Now that the stimulus is over, I’m already seeing moderate price reductions for mid-sized homes in good neighborhoods. I have a handful of these on my ‘must see’ list.
This sucker is going down.
Correction hasn’t happened yet.
http://stockcharts.com/charts/gallery.html?s=xhb S&P homebuilder index.
http://stockcharts.com/charts/gallery.html?s=kbh
http://stockcharts.com/charts/gallery.html?s=phm
http://stockcharts.com/charts/gallery.html?s=tol
http://stockcharts.com/charts/gallery.html?s=joe
http://stockcharts.com/charts/gallery.html?s=dhi
VMaxer,
Although I’ve no interest in buying in NY, I keep the pulse on local RE sentiment and I concur with your observations. My perception here in Dutchess County is that sales are trending downward while banks slowly and quietly bleed more REO onto the market. I see new non-REO ‘for sale’ signs go up nearly daily.
Quite honestly, I find the RE stupid talk more delusional today than it was during the heady days of 2002-2007. The sentiment among RE Adherents seems unanimously delusional. “It will come back”, “they’re not making any more land”, “the market is stabilizing”, etc. Yes…. these are all statements I’ve heard in just the last 3 weeks.
Houston…We have a problem.
Expert: 25,000-80,000 Houston jobs at risk with new drilling restrictions
11 News
HOUSTON — Houston’s economy will be hit hard as the government puts new rules in place that will block all new offshore drilling in the Gulf of Mexico, according to experts.
Dr. Lee Hunt, president of the International Association of Drilling Contractors, estimated Thursday the local job losses from the expanded moratorium on drilling, which includes both deepwater and shallow-water areas, would be in the tens of thousands.
“From 25,000 to 80,000 people immediately,” he said. “By immediately, I mean over a 90-day period.”
I wonder how many “relief wells” BP will drill as a work around.
Can these “restrictions” be enforced on China drilling in Mexican waters? I thought not.
I’m not sure how the US can enforce a drilling ban in international waters, unless other countries are signatories to some treaty or other.
Mexico has strict laws regarding drilling in their territory. Basically foreigners are not allowed, unless they are hired as contractors. This is why why Mexican deep water drilling isn’t happening. The contractors want a cut, a percentage of the profit as opposed to a float fee, which is forbidden by the Mexican constitution. PEMEX lacks the know how for deep water drilling.
Now Cuba on the other hand …
What would happen if BP well as in Mexican or Cuban waters and the slick landed on American beaches…
Or what if this slick doesn’t go as planned around FL and up the east coast but turned and aimed for Havana????
Would that violate the US export ban to Cuba?
“…..slick landed on American beaches…..”
The slick would end up at Home Depot’s parking lot as “Day Slicks”, and would get free healthcare and foodstamps. Arizona would pass a law requiring valid oil slick IDs, and California would tell all the slicks to come to Cali, because they support “oil diversity”.
I think I just hurt myself laughing X-GSfixr!
Perhaps the federal government should open a new cabinet level department: the Department for Mitigation of Unintended Consequences. We can call it the Fed-muck for short.
Priceless, Bubba. The Gulf is toast, unfortunately.
I saw Vitter from Louisiana on the tube not long ago, he reminded me of Stuart Smalley. First he was raving about the oil spill and how help is needed, now he’s begging Obama to lift the moratorium. What’s a prez to do?
It is kind of sad, though. Many of those folks could have gone fishin’, if they lost their oil gig. Now they can’t.
Oil gushing from under the cap. Very little being siphoned. I’ve told every one of my elected offishuls that this will never resolve until Tony Hayward is as far away as possible. This is one instance in which I hate to say that I’m right. Please, God, DO NOT even THINK about the nuclear option until Tony Hayward is ensconced in a monastery in Nepal without a cell phone.
http://www.google.com/hostednews/ap/article/ALeqM5gIXWYBTpLtSayJtg41LKXpxSxVPAD9G54JDG0
Another day, another BP f–kup.
If there was any malfeasance responsible for this disaster, the malefactors should hang.
Add to that all the shops, hotels and restaurants that are already suffering from the economy, and which will go belly up with greatly diminished revenues this Summer, and you can expect to see some significant housing price corrections along the Gulf coast. Add a few hurricane strikes and they are burnt toast.
It’s that smell of crude that gets to you. You can’t breathe the salt air without getting a whiff of it, I was watching the local news last night and one lady from Pensacola was taking about the smell. Not good. But, it should release some shadow inventory, I think some banks will just take a look at the Gulf Coast and shrug and decide holding the shadow inventory here is just not worth it. By then, even squatters won’t want it.
I seem to recall vaguely Ben saying something about the oil patch downturn and that some banks were saying hey, one dollar for the house if you’ll just take it off our hands. They didn’t want to pay the taxes.
Well, Florida’s gonna learn what it is like to really tighten the belt. And this will also be the test of whether Crist makes it as a Senator or not. Rubio’s sitting on the sidelines, just watching how he handles the spill. Frankly, so am I and so far, he flunks big time. He had plenty of time to prepare for the wash-up in Pensacola and the response was anemic to say the least. The 25 million he got out of BP for an ad campaign doesn’t mean squat. Now that the oil is already on the beach in Pensacola, it doesn’t matter whether Naples, Miami, Key West, Sarasota, etc has it or not. People won’t come. I wouldn’t swim off ANY Florida beach right now, and I live here. Nor would I eat any fish from a Florida fishing boat, I don’t care how clean they say it is.
I predict, unless Crist pulls off some really heroic act, he’ll be withdrawing from the Senate campaign on the pretext that Florida needs its Governor to be focused on the spill over the coming months. You heard it here first.
I remember Long Beach CA smelling like oil back when I was a kid and we’d drive down the Harbor Freeway to the ocean. I tend to forget how many oil fields were in Cali back in the day…not sure how active they are now.
More than 40 years after a Union Oil well blew out five miles off the coast of Santa Barbara, California, causing a major spill in 1969, the technology used by the oil industry to clean up and protect fragile environmental areas has hardly changed. Experts say that while the oil industry has spent billions investing in ways to find new oil, investment in safety and cleanup technology has not kept pace.
“It’s been 40 years and little has changed,” said David Pettit, a lawyer of the National Resources Defense Council. “Regulators have not forced the industry to update its cleanup technology.”
http://www.nytimes.com/2010/06/04/business/energy-environment/04iht-rbogoil.html?hp&ex=&ei=&partner=
But if the oil industry really needed to update its cleanup technology wouldn’t the “free market” have forced it to do it already? And if it didn’t, doesn’t that mean that there is no problem?
I heard on the radio the problem is lazy union workers and we need to lower taxes and regulations on the corporations and get out of their way because freedom isn’t free and I want my country back and the constitution does not guarantee the right of clean beaches and wetlands for tree-hugging socialists who want to force a public option onto my cold dead fingers.
But if the oil industry really needed to update its cleanup technology wouldn’t the “free market” have forced it to do it already? And if it didn’t, doesn’t that mean that there is no problem?
I heard on the radio the problem is lazy union workers …
Relax. You ask a reasonable question, then garble it all up with snark and tripe.
Pollution of course has to be taken into account in a free market system. IMO a major problem is that drilling is done by corporations, which are set up from the start (with the government’s explicit blessing) to evade any personal responsibility for collateral damage.
Also, ultimately there need to be private property rights in the oceans, so a polluter would be liable to a neighboring owner before the spill even reached the shore.
Relax. You ask a reasonable question, then garble it all up with snark and tripe.
Snark yes. Tripe no. Because:
The majority of the people screaming deregulation “free-market” tripe the past 30 years are the same people screaming the stuff I snarked about. They are one and the same. I’m just calling them out.
These are the people who have allowed the most damage to be done to America through their ignorance and gullibility. They have allowed corporations to become king while the middle class is hammered.
It is becoming more clear everyday.
Bubba,
Why doesn’t O just appoint an oil leak Czar? Kidding of course. The government’s response to this crisis has been pathetic. Why isn’t the Army Corps. of Engineers out in full force?
Do something man!
What exactly is he supposed to do? More posturing?
He could be getting some more officials to look at the flow rate, evaluate the dispersants, accelerate evaluations of alternative clean up methodologies.
Unfortunately, the navy and the Army Corps of Engineers don’t know any better how to stop the leak.
“What exactly is he supposed to do?”
Off the top of my head? Hmmmmm. How about assembling an advisory team from Stanford, Cal-Tech, MIT, NASA, etc.
Maybe order every cleanup vessel available to cleanup however possible NOW.
Give Haliburton a no-bid contract to spread sanitary napkins, with wings, throughout the gulf.
Do something. Hoping and praying for change apparently won’t cut it.
I don’t blame him for what happened but I surely hold him accountable for the progression of this disaster. I would have pushed BP aside at the earliest hint of incompetence.
This will haunt the messiah.
Heh, another board. Yeah that will work.
Need a Red Adair type person for this.
From Wikipedia….
In 1978, Adair’s top lieutenants Asger “Boots” Hansen and Ed “Coots” Matthews left to found competitor Boots & Coots International Well Control, Inc….
[Adair's] top employees (Brian Krause, Raymond Henry, Rich Hatteberg) left in 1994 and formed their own company, International Well Control (IWC). In 1997, IWC purchased the remnants of Boots and Coots and the company became Boots & Coots/IWC. Adair died in 2004. Boots and Coots/IWC was sold to Halliburton April 9, 2010.
So Halliburton bought out the remnants of Red Adair’s team this past April, just weeks before the big gulf blowout.
Any conspiracy theorists want to comment?
SV guy,
You really don’t want Haliburton to get a no bid contract. They are also involved in the oil rig collapse.
If anyone thinks that the government is just sitting back, wringing their hands, while BP is working the problem, is deluded.
BP probably has more “help” than they can stand right now. They probably can’t even fart right now, without giving briefings/reports to two dozen government agencies/representatives.
Want the truth of the matter? People in regulated industries try to do things the “right/safe” way, not because of the regs, or the penalties, or the fines, or even jail time…….the primary reason is to avoid having to deal with a $hitload of pinhead government inspectors/regulators/enforcers.
You can go a long time without seeing a guy coming by and saying “I’m from the government, and I’m here to help……”. But if you fook up, believe me, you end up having all kinds of “help”.
Government employees new motto (as heard from an FAA Inspector): “We’re not happy, until you are not happy”.
Heh, another board. Yeah that will work.
Need a Red Adair type person for this.
But why would “another board” consisting of the best and brightest from Stanford, Cal-Tech, MIT, NASA, etc. not be able to conceptualize the type of action a “Red Adair type person” would need to take?
Is it because it would be experts collectively working together for a common goal or because it involves too many “liberal” academics and the government or something? Therefore a hindrance to an all powerful “free-market” solution? How’s that working so far for us Americans?
There is no “Red Adair type person” on the face of the earth that has ever stopped such a leak at such a great depth. Could a “Neil Armstrong type person” have reached the moon without scientific “boards” and a national governmental effort?
Ideology has trumped common sense and stunted American’s ability to differentiate. Is the federal government too big? Yes. However there are certain BIG things that only government can solve or facilitate. Government HAS a role as to “boards”.
This is a national emergency that transcends politics and left vs right shopworn inanities.
Nothing to do with left-right politics, I just don’t have faith in solution by committee. Perhaps if they keep the committee small and lean, but a large group is unworkable. It becomes more of an honorary position, or CYA move to prove we “tried everything” and “consulted all the experts.”
BUT on the other had, the Red Adairs of the world are gone, and this problem probably transcends their abilities to fix.
SV and Rio: here’s an expert panel. I don’t know if they’ll come up with anything, though.
http://www.bloomberg.com/apps/news?pid=20601103&sid=afuo9QGjOvUk
First I’ve heard of that panel. Well that’s something.
A few responses. My Haliburton suggestion was purely tongue-in-cheek.
I am generally anti-bureaucracy but I would look for value anywhere and everywhere for this national disaster.
Underground high explosives.
Do something? How about this: BP- shut down all your operating wells in the Gulf immediately, and get all your engineering resources focused on fixing the leak…. Nah, that will just lead to more unintended consequences, like the layoffs in Houston that prompted my Fed-Muck quip.
The first order of business is to keep Congress out of the way.
The second order of business is to get the best engineers on the job, give them the resources to get the job done, and then stay out of their way.
Texas didn’t vote for Obama. Now it gets punished. That’s how Chicago politics work.
Look at the United - Continental merger. Continental is based in Houston. United is in Chicago.
Where will the new HQ of the company be? Chicago. The CEO of United is a life long pal of Obama’s, but that’s just a coincidence I’m sure.
The NASA cuts ordered by Obama will lead to 6000 job losses in Houston, while Florida will have none. The fact that Texas is a red state while Florida is a swing state is a coincidence as well.
Funny I haven’t heard of any mass layoffs happening in Chicago. Another coincidence.
I dunno, Eddie, so far, we’re getting bupkis for assistance from the Feds regarding the spill. Nuthin’. Zip. Nada. Zilch. That I know about, anyway.
An email from the President dated today.
“Today, there are more than 20,000 people working around the clock to contain and clean up this spill. I have authorized 17,500 National Guard troops to participate in the response. More than 1,900 vessels are aiding in the containment and cleanup effort. We have convened hundreds of top scientists and engineers from around the world. This is the largest response to an environmental disaster of this kind in the history of our country.
We have also ordered BP to pay economic injury claims, and this week, the federal government sent BP a preliminary bill for $69 million to pay back American taxpayers for some of the costs of the response so far. In addition, after an emergency safety review, we are putting in place aggressive new operating standards for offshore drilling. And I have appointed a bipartisan commission to look into the causes of this spill. If laws are inadequate, they will be changed. If oversight was lacking, it will be strengthened. And if laws were broken, those responsible will be brought to justice.”
I have authorized 17,500 National Guard troops to participate in the response.
I thought that state governors controlled the Nat’l Guard troops..?
That’s how
Chicagopolitics work.The NASA cuts ordered by Obama will lead to 6000 job losses in Houston, while Florida will have none.
That makes no sense. They’re retiring the space shuttle. There are going to have to be layoffs in Florida. Enter “nasa layoff” in to Google News and you will find an article with the following headline:
300 KSC workers set to lose jobs today
Here’s the link:
http://www.floridatoday.com/article/20100604/BUSINESS/6040313/1006/news01/300+KSC+workers+set+to+lose+jobs+today
Your comment about the United - Continental merger also make no sense. They’re putting the headquarters of the combined airline in Chicago to curry favor with the president? You really believe that? Couldn’t it be because United is the larger airline, or because it’s a shorter flight from Chicago to New York and DC?
A few years ago the Boeing corporation decided to move its headquarters out of Seatlle. They looked at a few different cities and chose Chicago. That was before Obama was elected. Maybe it’s just a good city to have a corporate headquarters in.
It’s Eddie again just shooting off his mouth. Just ignore and he will go away and joey in california will return.
Google united ceo obama and see
Yeah. Who the hell would live in Houston, given a choice?
March 9: Chicago Sun Times:
WASHINGTON–President Obama is lunching Tuesday with four top executives from Chicago area companies, including TransUnion’s Penny Pritzker, the woman who chaired Obama’s finance committee.
The list:
Jim Skinner, McDonald’s
Greg Brown, Motorola
Glenn Tilton, United Airlines
Penny Pritzker, TransUnion
Yep, no insider relationship there, no sir. And I’m sure United will get no special treatment by the FTC when considering whether the merger with Continental should go through or not.
That’s silly, Eddie. United was much larger and in a stronger financial position than Continental (not that any airline is in a particularly strong position.) Continental jumped at the chance, in front of US Air, and finally, the head of Continental gets to run the merged airline.
Tweedy Bird: Oh, granwny…it must be a very very very difficult thing, getting oil, look at this chart, looks like they have to stick a bunch of straws into the ground in order to make a profit…”
http://en.wikipedia.org/wiki/File:Gulf_Coast_Platforms.jpg
Once again Dodge, I have no clue what the heck you’re talking about.
Nor does he or she.
Blame it on the rain (rain)
Blame it on the stars (stars)
Whatever you do don’t put the blame on you
Blame it on the rain yeah yeah
So, now that an ill conceived and executed deepwater exploration well is fouling the coastline of the entire Gulf of Mexico, the US Gov’t in all of its wisdom will ban further exploration and drilling.
We need to get ready for $10/gal gasoline and a really nice US economic collapse.
Offshore drilling is necessary and needed. Green tech is not ready and we are in no position to to reduce our oil supplies. We will now need more imported oil.
I’m from Louisiana. I love the Gulf and the hunting, fishing, and good times I have had there.
We still need to drill. If you want to get mad, get mad at the poor engineering and regulation oversight. This disaster is a direct result of 1) The Corporate Oligarchy, 2) Optimism instead of Realism, 3) Failed Government.
Roidy
The have banned NOTHING. They have temporarily stopped operations in order to conduct inspections.
It they hadn’t, you people would be crying and moaning that they should make those inspections and that the “government should do something.”
It would be stupid, irresponsible and now, deadly dangerous to NOT do those inspections. And I have more news for you, a lot of those rigs aren’t going to pass.
I would wager that most of those rigs would pass and the rest would have minor violations. If there were a multitude of major violations, then we would have many more problems than we do. Look I live here.
What we are dealing with is a poorly understood drilling environment and a corporation - BP - that played cowboys with the technology.
We need to drill offshore for the foreseeable future. If not, then we are going to waste whatever progress the world economy has made.
We do not need to import more oil and continue to prop up all manner of governments who would just as soon shoot or bomb us as send more oil.
I wish we didn’t have to, but we do. Three Mile Island and Chernobyl are the same type of “What? Me worry?” attitude. We need nuclear power. More of it.
Note: Our favorite topic, the housing bubble and irrational behavior associated with that were possible before we had CDOs, SIVs, MBSs, and financial engineering. Those items just allowed us to turbocharge that mess into a Frankenstein monster.
Poorly understood technologies and blinding greed have caused these.
Wash, rinse, repeat. We can to do better.
Roidy
Hey SLIMMY,
Did the Az governor really say that her dad died fighting Hitler (hence her offense at being compared to Adolph)?
In fact her dad died of lung cancer in LA in 1955, though he hhad worked in a munitions factory during the war.
linky
http://www.newsweek.com/2010/06/03/arizona-governor-joins-list-of-politicians-stretching-military-service.html
Short sale house for sale I am interested in. I think I can get it for $185K-190K. It is 3 years old, sold for $329K when new. 4 bedrooms, big yard, 3 car garage, about 2700 sq ft. Doesn’t need any work except the grass in the back yard most likely needs reseeding, inside the house is immaculate, which is unusual for a short sale.
A nice 3 bedroom apartment in the area goes for $900-1000. With 10% down, piti for the house would be $1250 give or take. And that is based on 2010 taxes which will be lower in 2011 since values have fallen.
A house like this in the neighborhood or immediate neighborhoods rents for $1200-1400.
So….BUY or NO BUY?
I don’t see how taxes fall from a drop in market value/ assessments. Don’t they just boost the mill rate to get the dollar number they need?
Is this in Atlanta?
No, not Atlanta. Different part of the country altogether. We’re moving there a couple of years for family reasons and may end up staying. Lots of things in the air.
Started out looking at rentals, but when I saw what it costs to rent vs. what it costs to buy the same thing, the buy option looked appealing. Plus with 2 dogs finding a rental that is not a dump, is not easy. Rentals that are in good shape go fast, within days, off craisglist. There is no need for landlords to accept pets when there will be someone right behind me in line willing to rent it without pets.
The market is really two markets. Under $200K is pretty well, especially under $200K and over 2000 sq ft. Over $400K, nothing doing but lots of listings. Over $600K, people aren’t even bothering anymore. Yet nobody is lowering prices either at the high end, they’re just taking the houses off the market. We tried renting some of the higher end houses for sale, nobody took us on the offer. Lots of the houses are owned outright or were bought 10+ years ago and there is no rush to sell on the part of the owners….yet. On the other hand, under $200K is selling because, like me, people are doing the math and coming up with the conclusion that buying is a better deal than renting. So while I know this sentiment will be mocked, I believe that the low end market has bottomed out.
So the plan is if we do end up staying there past the 2 years, by then the high end market will fallen as well. We’d buy something in that segment, or custom build on some cheaply bought land. We’d either sell the “cheap” house for a wash (assuming the bottom is indeed here and 2 years worth of principal payments will equal the selling costs) or keep it and rent it out.
And the mill rate, to my knowledge anyway, is not increasing to compensate for the drop in values. Taxes fell in 2010 vs. 2009 and in 2009 vs. 2008. The drop 2010 vs. 2009 was almost negligible, but the 2009 to 2008 drop was significant. I assume other taxes were raised somewhere to make up for the lost revenue, but property tax is lower.
Just talking my way through the options. Figured this was as good a place as any to bounce ideas off of and get my thought process completely shot down.
Buy it.
Today. In fact, I may offer $10-20K more, mainly to pi$$ you off……
Well actually there have been 3 offers already. None were finalized because the house has some liens on it and none of the buyers had the $$ to pay. It’s about $4,000 in total. Which makes me shake my head in disbelief that $4K is what kept 3 separate people from making this thing happen.
The fact that people don’t have $4000 in cash doesn’t surprise me at all. So lower your asking price by another $4000 and offer to pay the known liens. And of course your offer is contingent on a good title report, inspections and disclosures. If it’s truly comparable to renting, you’ll also benefit from the prop tax and interest deductions. Of course, you’ll have to live somewhere while you’re waiting to hear back from the bank. Is it BofA?
Sounds, lovely, Eddie. Put in your low offer and see if they bite.
June 4, 2010, 4:59 p.m. EDT
MarketWatch Top 10 stories May 31 - June 4
NEW YORK (MarketWatch) - U.S. stocks suffered another turbulent week, ending with sizable losses.
The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (DJIA 9,932, -323.31, -3.15%) fell 323.31 points or 3.2% on Friday to close at 9,931.97 and notch a loss of 2% for the week. The Nasdaq Composite Index dropped 83.86 points or 3.6% to close at 2,219.17 on Friday. The index lost 1.7% for the week. The broader Standard & Poor’s 500 Index fell 37.95 points or 3.4% on Friday to close at 1,064.88. For the week the index was down 2.3%.
…
(Here is the MW list of top 10 stories:)
1. Hiring weak in May except for Census workers, U.S. says
…
2. Hungary warning heightens sovereign-debt fear
…
3. Euro slumps to fresh four-year low versus greenback
…
4. Drumbeat for Fed rate hike grows louder
…
5. Anxious investors flee stock funds
…
6. Commentary - Making sense of the selloff
…
7. AT&T to end unlimited wireless-data plans
8. Fiscal conservative Kan to be Japan’s next leader
…
9. Could Apple still have iPhone surprise up sleeve?
…
10. Recession brings tough love to family firms
…
A segment on CNN about this years hurricane season showed 32% feel they’re unprepared. The panel started talking about people who do not carry enough insurance. The expert explained to the hosts how easy it was to get insurance and seemed to imply people didn’t get around to it due to some sort of character flaw. Is it possible that the fact that the populace is generally tapped out or that the price to insure has crossed over into exhorbitant is an idea that still escapes the “experts”? Or will we see the rise of corporate lackeys verbally whipping the dead horse in an attempt to urge people into handing over the bonus earning dough?
Or maybe all of those people are upside down on their mortgages, so they wouldn’t lose anything (at least financially) if a hurricane came and blew the house away.
Good point, MM. But I have a friend who’s working like crazy to recover from the Tennessee flooding. She had been in her home all of 6 mos. before the flood, is doing most of the work themselves and is taking out $70k in loans to make the house livable again. They are not in a flood zone. The thought of walking away never crossed their minds. I think there are the operators and then there are the ones that just want do the best they can with the one house they’ve got. Her husband makes well over 6 figures, has been looking for flood insurance and has trouble finding anyone who sells it in their area.
You have to purchase flood insurance from the feds. No joke. Commercial insurance companies stopped selling flood insurance a long time ago.
Gee, I wonder why?
“Or maybe all of those people are upside down on their mortgages, so they wouldn’t lose anything (at least financially) if a hurricane came and blew the house away.”
Pay n’ Pray.
Keep paying the insurance while praying for mean old hurricane ‘Wolf”.
NOW they tell us!
And as for Mr. Pinnegar’s assertion that the fundamental no-arbitrage condition of finance fails to hold in high-end coastal rental markets, I once again paraphrase the late, great Herbert Stein:
“Anything that cannot go on forever will stop.”
Though the Trulia measure may be a reasonable approach to making the buy-or-rent comparison across markets, it is flawed as a direct comparison of the cost of renting versus owning in a given locale because it does not adjust for quality. One should compare the ratio of the price of a given quality of housing to the cost of renting comparable housing, rather than, say, comparing the purchase price of homes to the rental price of apartments. The purchase-price-to-rent ratio will naturally look pretty high if the numerator of the fraction represents higher quality homes than does the denominator.
But good for Trulia to at least get the conversation started.
Survey suggests it’s better to rent than buy in area
By Roger Showley, UNION-TRIBUNE STAFF WRITER
Originally published June 4, 2010 at 1:38 p.m., updated June 5, 2010 at 12:10 a.m.
Trulia dot com’s new index compares average list prices and rents in the 50 biggest cities in the United States.
It pays to rent — not buy — for most people in San Diego County, says Trulia dot com.
In its first survey comparing buying vs. renting, the San Francisco-based website ranks San Diego the eighth-highest market that favors renting instead of owning out of 50 cities surveyed.
Trulia derived the ratios by dividing the average home price by 12 months of the average rent for a two-bedroom unit. In San Diego the average home price was listed as $396,409 and the average rent for a two-bedroom rental was $1,670. That works out to an own-to-rent ratio of 19.8 for San Diego.
Topping the list: New York with an own-to-rent ratio of 32.6 to 1. Minneapolis had the lowest at 7.5 to 1.
“We’re not suggesting that it’s unwise to buy in these areas, though,” said Trulia co-founder Pete Flint, “just that it’s significantly more expensive than renting. In many of these cities, even though home buying is much more costly than renting, prices are still much lower than they have been in a long, long time.”
Trulia used assumptions from Moody’s Economist.com on renting vs. owning to intepret the ratios. Cities with an own-rent ratio of 15 or less were considered best for buying, while those with a ratio of more than 20 were better for renting.
“But it might still make financial sense (to buy), depending on the situation,” Trulia said.
Robert Pinnegar, executive director of the San Diego County Apartment Association, said he was not surprised by the findings.
“We’re a coastal California city,” Pinnegar said, “so it’s always going to be more expensive to buy than to rent.”
…
Pinnegar neglected to add that “California real estate always goes up.”
Significantly more expensive = unwise.
Sorry, the corporate doublespeak has cow manure written all over it.
This is the “Florida” quote of the day.
Somebody should tell Mr. Pinnegar that in the last bust in 1994, there were people weeping in Pacific Heights when they went bankrupt.
Not only was it significantly cheaper to buy then than to rent, it’s gonna happen again between 2013 and 2015.
Pinnegar is going to be p*ssing vinegar when that happens.
This game is very far from being over.
FPSS, will you buy a house in SF in 2013? If so, I think you should get one with a view and have a HBB get together. You can tell us which wines to bring and hopefully you’ll make hors d’oeuvres.
Official Joshua Tree Extension v1.5 available here:
http://mysite.ncnetwork.net/drumminj_tx/download.html
Verizon is handing off its accounts to another company in a month..hopefully I’ll be able to get the new company to fix their web servers to host the file correctly. Until then, you still need to save the file to your computer by right-clicking(or ctrl+clicking) and choosing “save as…”, then drag onto the browser window.
I love love love the name of the extension.
That is so awesome!
I love love love the name of the extension.
FPSS, are you late to the party? The extension’s been around (with same name) for what, a year now??
Yeah, late to the party. Oh well!
glad you like it, regardless!
Made offer of 150k… gets $2K-mo.rent easily (rents may be dropping though) I own the one to the right…bought in ‘02 for 181K. Itchy trigger finger.
http://www.zillow.com/homedetails/2258-Woodberry-Ave-Hemet-CA-92544/17979452_zpid/
Better hurry, folks will be climbing over each other to get to…Hemet.
…to see Ramona?
I don’t know,elvis. Sounds like a lot of maintenance with four bathrooms. Why not buy a 3/2 for $100,000?
Meh, I own the one next to it, I know what to expect…triple the fun. Everyone seems to have one problem a year…my handyman lives one street over. Doing it since 1987.
Oh but to answer your question REh, I own a decent 3/2- pool, in Hemet. Bought for 150K in 2003, worth 100K, rented @ $1300/mo. (pool guy NOT included). Better CAP rate, no?
So, to clarify…you live in Hemet?
“This is the first time most citizens have experienced a national house price decline. The last time this happened was the Great
Depression.”
~David Crowe, Economist
OK
Thanks for the wondrous insight. Nobody could’ve seen this coming, certainly not an economist.
And the lessons learned in the Great Depression were lost as many of that generation moved out of public life and died over the past few decades.
So… expect 10-20 years of contraction, a return to a non-leveraged economy, then in 50 years, as the lessons of this debt bubble fade, people will once again get hooked on the economic crack of debt and the cycle starts over again?
Well, if you don’t count the Savings & Loans disaster about 20 years ago, he’s right.
What a moron. What is he, a college student?
Wonderful banter on global economic collapse! http://www.youtube.com/watch?v=NOzR3UAyXao&feature=youtube_gdata
Faster,
Still planning on heading to Edinburgh in August?
Filed under: “follow the rig,…or…follow the lease money $$$$$”
Goodbye Gulf, Hello Malaysia!
Operations on Deepwater Expedition Suspended
May 28 | Deepwater Expedition | 10,000 ft. Drillship
Reliance Industries has suspended exploration activities at the KGV-D3-W1 well due to mechanical issues with the control system of the BOP on the Deepwater Expedition drillship. Reliance has suspended the well and intends to re-enter at a later date with an alternative rig. The Deepwater Expedition is rated to work in water depths up to 10,000′ and entered service in 1999. Reliance has the rig on contract through September 2010 at dayrate in the mid-$370s. Upon conclusion of the Reliance contract, the rig is scheduled to depart for Malaysia to work for Petronas on a three-year deal at a dayrate in the low-$640s.
http://www.rigzone.com/data/
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Zinc or Black Titanium? ( Hwy thinks ol’ Howard Hughes could’ve had a lot of fun with this…)
How to Get the Amex Black Card
by Brian O’Connell
Friday, June 4, 2010
So how do you go about getting a Black Card? The good news, as it were, is that you no longer have to be invited by Amex to get one. Just call Amex and ask. To heighten your chances, you’ll need to accomplish the following (from the blog QuickSprout.com, whose founder is a Centurion cardholder):
• Have a nearly blemish-free credit history.
• Spend at least $250,000 annually on a current Amex Platinum or Gold card.
• Accept a one-time card membership fee of $5,000, along with an annual fee of $2,500.
• Have a “major” net worth (undisclosed by Amex)
Bend over and thank amex for their great company.
June 6 (Bloomberg) — European Central Bank President Jean- Claude Trichet and Treasury Secretary Timothy F. Geithner diverged on prescriptions to sustain growth, with Europe set to tighten budgets and the U.S. seeking stronger domestic demand.
The impact of narrower budget gaps “on growth could not be considered negative because it would improve confidence,” Trichet told reporters yesterday after meeting with Group of 20 finance chiefs in Busan, South Korea. The need for such action is clear in “old industrialized economies,” he said.
The remarks underline determination within the 16-nation euro area to shrink budget deficits in the wake of a sovereign debt crisis that has led to a 750 billion-euro ($913 billion) rescue fund for the region’s weakest members. The emphasis contrasts with the message delivered to the G-20 by the U.S., which wants countries with trade surpluses, including China and Germany, to stoke demand to help sustain the global recovery.
“Stronger domestic demand growth in Japan and in the European surplus countries” is needed, Geithner said at a separate press briefing in Busan. Spending in both areas is “relatively weak,” he said.
Grasshoppers hate it when ants won’t hand over the food.
“…with Europe set to tighten budgets and the U.S. seeking stronger domestic demand.”
Professor Keynes, I would like you to meet Professor Hayek.
Friedrich August Hayek
(1899-1992 )
…
Most of Hayek’s work from the 1920s through the 1930s was in the Austrian theory of business cycles, capital theory, and monetary theory. Hayek saw a connection among all three. The major problem for any economy, he argued, is how people’s actions are coordinated. He noticed, as Adam Smith had, that the price system—free markets—did a remarkable job of coordinating people’s actions, even though that coordination was not part of anyone’s intent. The market, said Hayek, was a spontaneous order. By spontaneous Hayek meant unplanned—the market was not designed by anyone but evolved slowly as the result of human actions. But the market does not work perfectly. What causes the market, asked Hayek, to fail to coordinate people’s plans, so that at times large numbers of people are unemployed?
One cause, he said, was increases in the money supply by the central bank. Such increases, he argued in Prices and Production, would drive down interest rates, making credit artificially cheap. Businessmen would then make capital investments that they would not have made had they understood that they were getting a distorted price signal from the credit market. But capital investments are not homogeneous. Long-term investments are more sensitive to interest rates than short-term ones, just as long-term bonds are more interest-sensitive than treasury bills. Therefore, he concluded, artificially low interest rates not only cause investment to be artificially high, but also cause “malinvestment”—too much investment in long-term projects relative to short-term ones, and the boom turns into a bust. Hayek saw the bust as a healthy and necessary readjustment. The way to avoid the busts, he argued, is to avoid the booms that cause them.
…
News from behind “The O.C.” Curtain:
Businessman faces 14 felony counts in real estate deed scheme:
By TONY SAAVEDRA, OC Register
A bankrupt businessman was charged Friday with 14 felony counts in a $3.5 million real estate scheme in which he took over vacant homes and rented them out, prosecutors announced.
Blair Hanloh, 46, of Long Beach was charged with grand theft, recording false instruments and commercial burglary in the seizure of five houses in Anaheim Hills, Dana Point, San Clemente and Capistrano Beach. Hanloh, free on $50,000 bail, could face 21 years in state prison if convicted on all charges. He is scheduled to be arraigned July 14.
Orange County prosecutors have shared their findings with district attorneys in Los Angeles , San Diego and San Bernardino counties, where Hanloh also is believed to have taken over at least seven more houses.
Orange County Senior Deputy District Attorney Pete Pierce said Hanloh had attempted to portray himself as a modern-day hero, battling the banks.
“He set himself up as some sort of Robin Hood, and that is a joke,” Pierce said. “Hanloh was clearly taking advantage of the collapse in the residential market.”
An Orange County Register investigation found that Hanloh, working out of an Anaheim massage clinic, targeted homes that were foreclosed or being prepared for short sale. He filed quit-claim deeds turning the property over from himself to a business he ran, Diversified Management. Quit-claims are typically used when one owner releases interest in a property to another owner. Authorities, however, say Hanloh’s deeds are phony because he did not own the homes in the first place.
Hanloh used the documents to show prospective renters and placate police called by neighbors, who believed the properties were taken over by squatters.
In Anaheim Hills, Hanloh is accused of scoping out two houses on Rainview Court and Birch Tree Lane, drilling their locks and placing “No Trespassing” signs on them. He is accused of placing unsuspecting tenants in those houses, as well as others in south Orange County.
Hanloh could not be reached for comment Friday.
Jamie Quigley, who lives near one of the seized houses in Dana Point, was ecstatic at the news of Hanloh’s charges.
“I think it’s absolutely wonderful,” Quigley said. “Someone who is so blatantly breaking the law gets justice.”
Let’s see 3.5 million dollar fraud =21 years
Wall Street trillion dollar fraud = bail out????
How much tax payer money spent “guarding” dudes that stole a 6 pack of Pabst Blue Ribbon & a pizza with x1 topping?
This is proof government regulations don’t work and it should just get out of the way I think or something like that.
Oil Rig Evidence Points To Lack Of Regulation AP
The first firm evidence of what likely caused the disastrous Gulf of Mexico oil blowout — a devastating sequence of equipment failures — drives home a central unsettling point about America’s oil industry: key safety features at tens of thousands of U.S. offshore rigs are barely regulated.
Wednesday’s hearings by congressional and administration panels in Washington and in Louisiana laid out a checklist of unseen breakdowns on largely unregulated aspects of well safety that appear to have contributed to the April 20 blowout: a leaky cement job, a loose hydraulic fitting, a dead battery.
The trail of problems highlights the reality that, even as the U.S. does more deepwater offshore drilling in a quest for domestic oil, some key safety components are left almost entirely to the discretion of the companies doing the work.
http://seattletimes.nwsource.com/html/businesstechnology/2011841567_apusgulfoilspill.html
I live in Houston. I know a few rig hands. The only place they hate going offshore more, than the Gulf… is Nigeria.
Government regulation has failed once again in the case of the BP oil spill, and as usual, the standard outcry is for … more regulation. It’s always an exercise in 20-20 hindsight, always some corrupt official, some oversight, some minor glitch. It’s never the concept of regulation itself that’s to blame. It’s a way for the commentators to claim that they’re smarter than the rest, that if only they had been in charge, none of this would have happened.
As I explained above (post hasn’t shown up yet), I think it would ultimately be a big improvement if we would diversify and individualize property rights on the high seas. Make sure there are always INDIVIDUALS (not government-chartered corporations) personally responsible for a disaster. If your neighbor in the ocean is doing a potentially dangerous operation, you would have the incentive (and the right, via nuisance law) to investigate, hire your own experts, and get your own opinions on whether the operation is safe. Government regulation is by nature distant, uninterested, and inefficient.
brilliant
An individual making 50 to 100k a year will be responsible for this mess???????????????
Your neighbor in the Ocean????
Neighbors can already do this and they don’t.
Why? Because it is insanely expensive.
Government regulation has failed once again in the case of the BP oil spill, and as usual, the standard outcry is for … more regulation.
Correct Government regulation failing but the reason it failed is because there wasn’t enough of it or it wasn’t being enforced.
New government and BP documents, interviews with experts and testimony by witnesses provide the clearest indication to date that a hodgepodge of oversight agencies granted exceptions to rules, allowed risks to accumulate and made a disaster more likely on the rig, particularly with a mix of different companies operating on the Deepwater whose interests were not always in sync. NYT June 6
Individual responsibility would not have stopped this disaster from happening as individual responsibility does not always deter crimes. I don’t care as much about people being punished as I do something like this never happens again.
Individual responsibility would not have stopped this disaster from happening as individual responsibility does not always deter crimes. I don’t care as much about people being punished as I do something like this never happens again.
You don’t think being personally liable for the cleanup costs/civil suits would be a deterrent?
Or having no cap on the damages BP must pay?
It’s regulation - laws - that protects those who made the decisions leading up to this from being personally liable, and that limits the liability of the corporation.
For you contrarians here is a point to ponder. Go to Vanguard Funds website. Look at the performance of all of its funds. VGPMX, which is Vanguard’s Precious Metals and Mining Fund, returned an annual gain of over 20% per year for the last ten years from May 31 2000 to May 31 2010. Very impressive.
On the opposite end, Vanguard’s US Growth fund lost an average of 6.98% per year through May 31 2010. It’s in the large cap growth class. In fact the biggest losers of Vanguard were the large cap growth and large cap blend funds.
If you are a market cycle fanatic, you probably should start buying large cap US stocks.
The political pendulum will swing. The U.S. will show Greece, Britain, Spain, and Hungary what “austerity” means after the bum Congress is thrown out. Congress will be forced to cut federal employee bennies, pensions, and numbers of employees. Congress will be forced to cut its own perks.
Laugh all you want. It’s going to have to happen. I see a third way out and it’s cut government spending across the board. It’s starting in Europe and the US already demonstrated by the BRAC in the 1990s that it can work.
ALL of my 401K is in VIPSX… Vanguard inflation protected bond fund.
“If you are a market cycle fanatic, you probably should start buying large cap US stocks.”
Been doing that, very gradually, through DCA. Given how whacked out stock markets are right now, putting too much in at any one time amounts to gambling, and could result in a Fat Finger Boy gambling loss. Spreading out stock market investments in fixed dollar amounts over time during a period of economic weakness has several effects:
1) You buy more shares after the price has been hammered down, and fewer shares after irrational exuberance or monetary stimulus has driven them back up, resulting in a lower average purchase price over time than the average market price, assuming the future average price is no lower than it is currently (of course, this could backfire — just look at Japan!).
2) Assuming unemployment eventually goes down, individual investors will likely return to the market some day, at which point prices may get driven higher for fundamental reasons.
3) Monetary stimulus during times of economic weakness has traditionally translated into massive stock market rallies during the subsequent recovery period, leaving savers with excessive dollar-denominated mattress money inflated away to oblivion.
4) Eventual economic recovery will be accompanied by higher corporate profits, providing a fundamental justification for higher share prices.
“If you are a market cycle fanatic, you probably should start buying large cap US stocks.”
“These f@!king Guys!,” Jon Stewart.
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
&
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
ziiiiiiiiiiiiinggggggggggggggggggggg….. (exeter™)
“Laugh all you want. It’s going to have to happen.”
And possibly much sooner than expected:
The Financial Times
G20 drops support for fiscal stimulus
By Chris Giles and Christian Oliver in Busan
Published: June 5 2010 11:54 | Last updated: June 5 2010 11:54
Finance ministers from the world’s leading economies ripped up their support for fiscal stimulus on Saturday, recognising that financial market concerns over sovereign debt had forced a much greater focus on deficit reduction.
The meeting of the Group of 20 finance ministers and central bank governors in Busan, South Korea, also dropped proposals for a global banking levy, instead giving countries leeway to do what they thought best for their domestic circumstances.
The communiqué of the meeting made it clear that the G20 no longer thought that expansionary fiscal policy was sustainable or effective in fostering an economic recovery because investors were no longer confident about some countries’ public finances. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability,” the communiqué stated.
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation,” it added. “We welcome the recent announcements by some countries to reduce their deficits in 2010 and strengthen their fiscal frameworks and institutions”.
These words were in marked contrast to the G20’s previous communiqué from late April, which called for fiscal support to “be maintained until the recovery is firmly driven by the private sector and becomes more entrenched”.
After the meeting, finance ministers acknowledged that the landscape had changed. George Osborne, British chancellor, claimed credit for the change. The new words were a “significant success in getting endorsement from the G20 for … a significant change in tone in the language on fiscal sustainability”.
Many other finance ministers accepted market realities had changed the G20’s policy, Christine Lagarde, French finance minister, said: “There’s a large majority for whom redressing the public finances is priority number one. For a minority, it’s supporting growth”.
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As of this May 12, 2010 BW article, the Euro traded at $1.2529. On Friday, it dropped to $1.1966 — a hair’s breadth above its 1999 debut level of $1.18.
Bloomberg
Euro May Slide to 1999 Debut Level on Deficits, SMBC’s Uno Says
May 12, 2010, 9:46 PM EDT
By Shigeki Nozawa
May 13 (Bloomberg) — The euro may tumble back to its starting level of $1.18 in January 1999 as widening deficits in the European Union jeopardize the single currency’s status, according to Sumitomo Mitsui Banking Corp.
The euro’s emergence as an alternative to the dollar as a major currency is in doubt because none of the European member states “follow budget deficit rules set by the Maastricht Treaty,” said Daisuke Uno, chief strategist at the unit of Japan’s third-largest banking group. The treaty stipulates that EU states should keep their budget deficits within 3 percent of gross domestic product.
“The time has come to reconsider the status of the euro,” Uno said. “The currency needs to go back to the drawing board and start over.”
The euro traded at $1.2529 on May 6, its weakest since March 2009, before EU leaders on May 10 unveiled a loan package worth almost $1 trillion and a program of bond purchases to stop a sovereign-debt crisis. The currency was at $1.2636 as of 10:24 a.m. in Tokyo, from $1.2614 in New York yesterday. Its near-term target is $1.18, Uno said.
The European Central Bank will eventually be forced to introduce a near zero interest-rate policy, Uno said. It may cut borrowing costs from 1 percent to 0.1 percent, the same level as the Bank of Japan’s benchmark rate, he said.
The EU is unlikely to break apart and the euro’s losses will be limited during the second half as concerns over budget deficits and fiscal sustainability spill over to the U.S., damping demand for the dollar, according to Uno. The dollar may weaken to $1.35 versus the euro at the end of this year and tumble to as low as $3 per euro in 2011, he said.
The U.S. currency may also fall to 80 yen at the end of this year and 50 to 60 yen in 2011, he said. The greenback was little changed at 93.22 yen today.
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From The Sunday Times
June 6, 2010
City watchdog fears euro disaster
Financial Services Authority probes banks’ exposure to the eurozone as sovereign default concerns grow
Iain Dey
THE City watchdog is stress-testing Britain’s biggest banks over fears they could be hit by the growing financial problems of the eurozone.
A “risk map” of Europe has been drawn up by senior officials at the Financial Services Authority, examining potential problems on a country by country basis.
Banks have been asked to model a number of disaster scenarios, including Greece defaulting on its loans. Analysts estimate that British banks have a total exposure of more than £100 billion to Greece, Portugal and Spain alone.
Disclosure of the stress tests underlines how serious financial regulators think the eurozone crisis could become.
On Friday, Hungary became the latest country to spread fear across Europe when the new government warned that its predecessor had “falsified data” about the country’s public finances.
Although Hungary is not part of the single currency, banks across Europe would be hit by any sovereign crisis. The euro slid below $1.20 for the first time since March 2006 on the news. Analysts now expect it to hit parity with the dollar.
François Fillon, the French prime minister, said on Friday that the weakening currency was “good news” because it could boost European exports. His comments accelerated the currency’s slide and prompted selling of French government bonds.
Yesterday G20 finance ministers called for governments to put their national finances in order to calm the international financial markets.
Meeting in Busan, South Korea, the ministers also stepped back from plans for a global bank tax following complaints from Canada, Australia, Brazil and India.
The meeting also concluded that new bank capital rules should be introduced gradually in an effort to ensure that lending to businesses is not curbed.
“The global economy continues to recover faster than anticipated, although at an uneven pace across countries and regions,” the G20 ministers said. “The recent events highlight the importance of sustainable public finances and the need for our countries to put in place credible, growth-friendly measures, to deliver fiscal sustainability, differentiated for and tailored to national circumstances.”
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