Bits Bucket For December 14, 2010
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Tax package may threaten U.S. top-notch credit rating—Moody’s
SAO PAULO — Moody’s warned Monday that it could move a step closer to cutting the U.S. Aaa rating if President Obama’s tax and unemployment benefit package becomes law.
The plan agreed to by President Obama and Republican leaders last week could push up debt levels, increasing the likelihood of a negative outlook on the United States rating in the coming two years, the ratings agency said.
A negative outlook, if adopted, would make a rating cut more likely over the following 12-to-18 months.
For the United States, a loss of the top Aaa rating, reduce the appeal of U.S. Treasuries, which currently rank as among the world’s safest investments.
“From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth,” Moody’s analyst Steven Hess said in a report sent late on Sunday.
Moodys rated Lehman Aaa days before the bakeuptcy didn’t they?
probably.the rating agencies are useless these days.they take so many bribes that would even make bumbeling barney cringe.
Lehman still could probably buy a Aaa rating if they had enough money.
http://www.prisonplanet.com/10-signs-that-confidence-in-u-s-treasuries-is-dying-and-that-financial-armageddon-may-be-approaching.html
U.S. Treasuries are JUNK! Moody’s is a corrupt, fraudulent organization!
The Repubs gave him no choice. It seems they had a lock on being able to defeat UE extension, and most certainly making sure the middle class taxes went as well, if he didn’t go along with it.
So let’s put the blame where the blame is due: on the same SOBs that got us into this mess.
Yeah, but the defeat of UE extension and of middle class tax cuts woulda put our bonds in better shape at least in the short run. So he coulda taken THAT choice. Why not? Don’t tell me “political suicide” …that would be the Repubs’ excuse TOO.
A visual presentation of which party controlled the govenment and when:
http://uspolitics.about.com/od/usgovernment/l/bl_party_division_2.htm
Regarding that table I posted earlier:
From 1995 to 2010, there are 24 cells. 15 of those cells are red - controlled by Republicans. 9 of those cells are blue - controlled by Democrats.
So, if we were to assign blame based on that one methodology, the Republicans are 15/24ths or 5/8 or 62.5% to blame, and the Democrats are 9/24ths or 3/8ths or 37.5% to blame.
Fewer U.S. Homes Were `Under Water’ in Third Quarter as Foreclosures Rose
The number of U.S. homes worth less than the debt owed on them dropped in the third quarter, largely because of mounting foreclosures rather than a rise in property values, according to CoreLogic Inc.
About 10.8 million homes, or 22.5 percent of those with mortgages, were “underwater” as of Sept. 30, the Santa Ana, California-based real estate information company said in a report today. That was down from 11 million, or 23 percent, at the end of June, the third straight quarterly decline.
Falling property values and unemployment near 10 percent have spurred a surge in foreclosures. The number of homes offered in foreclosure auctions averaged 110,000 a month in the third quarter compared with about 98,000 in the same period a year earlier, said Mark Fleming, CoreLogic’s chief economist.
12*110,000 = 1,320,000 annualized rate…
Thanks for doing the math for the sheeples bear. The victims of public education need all the help they can get. Remember to do your twozies and threezies.
Yep. That’s some mighty high falutin’ cipherin’ right there.
Audit the Fed in 2011
Ron Paul
Since the announcement last week that I will chair the congressional subcommittee that oversees the Federal Reserve, the media response has been overwhelming. The groundswell of opposition to Fed actions among ordinary citizens is reflected not only in the rhetoric coming out of Capitol Hill, but also in the tremendous interest shown by the financial press. The demand for transparency is growing, whether the political and financial establishment likes it or not. The Fed is losing its vaunted status as an institution that somehow is above politics and public scrutiny. Fed transparency will be the cornerstone of my efforts as subcommittee chairman.
Thanks to public pressure earlier this year, Congress did pass legislation that requires the Fed to disclose some information about its bailout of select industries and companies following the 2008 financial crisis. So two weeks ago the Fed released data concerning more than $3 trillion of assistance it offered to banks through its bailout facilities. After reviewing this data, however, we are left with many more questions about the Fed’s “lending”.
“The Fed is losing its vaunted status as an institution that somehow is above politics and public scrutiny.”
Bingo!
Thank you, Bear, for linking to an Al-Jazeera story. They’re one of my favorite non-US news sources.
derka derka mohammed jihad……A pocka sherpa sherpa a bock allah ……….aahhh derka derka derka
Dr. Paul will be fun to watch as he grills Osama Bin Bernenke’s cajonitos.
As the federal reserve was created outside the Amendment process with the Federal Reserve Act, what’s to keep congress from creating The Balanced Budget Act?
“what’s to keep congress from creating The Balanced Budget Act”?
Congress
” ‘what’s to keep congress from creating The Balanced Budget Act’?
Congress.”
Is that the same Congress that won’t eliminate the withholding of income taxes (which was started to pay for WW2), make tax obligation day November 4 ( instead of April 15) and won’t allow interstate competition between insurance companies?
Funny
This is downright befuddling. If England spends half as much per person on health-care, insures everyone and the English are healthier than Americans, does that mean that the USA spends twice as much per person as England, does not even insure everyone and we’re not even as healthy as the English? And if so, where does that “we’ve got the best health-care in the world” part come in?
Is Fee-for-Service What Ails America’s Health Care System?
http://www.dailyfinance.com/story/is-fee-for-service-what-ails-americas-health-care-system/19311085/?icid=sphere_copyright
The facts are daunting: The U.S. spends 16% of its GDP on health care, 60% more than Germany and other Northern European “socialized medicine” states, and double what Japan devotes to health care.
The U.S. lays out almost $7,300 per citizen; oil-rich Norway is a distant second at $4,760 per citizen. And research has found that despite spending twice as much per person on health care as (socialized medicine) England, Americans are less healthy than their British counterparts….
…There was a time in the U.S. when the fees for medical services were entirely transparent. My sister recently gave me a copy of a hospital fee sheet for having a baby in 1952. The obstetrical fee was $30, with an additional $30 for Caesarian section. A semi-private room was $16, a private room was $19 a day, a deluxe private room was $23. The fee for caring for the baby while the mother was in the hospital was $6 a day.
According to the Bureau of Labor Statistics inflation calculator, $1 in 1952 is equal to $8.12 in 2009 dollars. So the cost for having a baby in today’s dollars was about $245, and the daily rate for a deluxe private room was $187. Typically in that era, patients paid their hospital bills in cash.
….there is one vast government agency which provides health care without a fee-for-service model: the Veterans Administration, which provides health care to millions of U.S. veterans for about $47.2 billion in 2009. (The total VA budget was about $93.7 billion.)
No agency is perfect, public or private, but the VA provides care to millions of vets, many disabled, for less than a tenth of the cost of Medicare’s system.
Maybe we should learn from this successful, large-scale health care program, in our own backyard, and reconsider the entire fee-for-service model
….there is one vast government agency which provides health care without a fee-for-service model: the Veterans Administration, which provides health care to millions of U.S. veterans for about $47.2 billion in 2009. (The total VA budget was about $93.7 billion.)
No agency is perfect, public or private, but the VA provides care to millions of vets, many disabled, for less than a tenth of the cost of Medicare’s system.
Yesterday evening, I took my weekly constitutional around Downtown Tucson. My walking posse included a retired Air Force officer. He’s a big fan of the VA, and of the health care he received while on active duty.
That’s on the health care consumer side.
I’ve also known many people who worked for the VA, including my mother. To a man and woman, they all enjoyed their VA jobs and enjoyed serving our nation’s veterans.
I hated working for the VA, but it was years ago. I worked one day a week at the Long Beach VA - it was affiliated with the medical school I worked for. Back then we made the veterans wait long hours in the waiting room for overbooked clinics. There were lots of layers of bureaucracy and it was hard to get things done. I remember one time I had a patient who needed a special type of radiation that they didn’t do at the VA for his tumor, and the administrators didn’t want to pay for it. His treatment was delayed for many months (it was not a cancer), until I called a veterans’ group. They contacted the media and my patient was featured in Newsweek. He got his radiation at UCLA the following week.
It’s probably better now.
My step got the runaround about his shoulder pain when he was in the service. It seemed like they did everything they could to put off the diagnosis until he was discharged, the staff sgt told him to man up and ignore it etc.
I don’t know what to believe but it appears the mil is pretty good at keeping medical costs down for non-combat injuries…
I have had similar experiences
Welcome to socialized medicine.
It is what I experienced in the army.
You wait and wait and wait and then take whatever they give you. You have no choice in the matter and can not go around the system.
Unless you want to make some waves. But then that is the end of your career.
You could also go to a private doctor and pay for the medical treatment yourself. Kinda like Canadians do.
Tri Care.
The military has allowed for private treatment for decades, although you must first be vetted by the VA doctor, but then you are free to seek treatment near where you live by the doctor of your choice. (this is not for every single case, but for the majority of outpatient and chronic treatments)
I think depends on the location. A friend’s dad, three times his bomber shot down over Germany, always raved about how good the care was at the VA hospital. This was in Arizona.
But he was a funny guy. Born in Germany, fluent in the language, came to the states as child, then went back to Germany to bomb the sh it out of it. He always said he was really good at getting shot down. The stories that man could tell…
I’ve heard horror stories about VA hospitals. In the end, it’s all about biz. If you can charge it, they will. My segway broken leg incident came out at around $35,000. Everytime I’d go in the staffers would ask me the same questions that I had already answered. Barely a number.
Thats my understanding of the VA. The services were so bad, there was so much media attention about it, finally they had to do something. So they improved it.
Now it functions as it should. Job done.
Thank god the insurances companies don’t deny their PAYING customers, treatments.
Oh wait…
Just look at your fellow Arizonian John McCain.
He was born in a military hospital and has received government medical care his entire life. They did a great job putting him together after the prison camp in Vietnam.
He’s 74 and still kicking!
I am sure Cindy’s vast wealth comes in handy, too.
ISTR that Cindy’s family has been in the liquor wholesaling business for a long time. They’ve done quite well at it. Her money is what got John into politics. And it’s what’s kept him there.
He’s a big fan of the VA
Yep, the VA & Staff saved my pa after a stroke & rehabilitated him as well. Newer hospital, dedicated bronze placard of Jimmay Carter too!
(Hey, Hwy’s first home purchase was an assumed VA loan @ 15.5%!)
Yippie-kye-aye!
Our local VA is going thru some turmoil, trying to rid itself of it’s ER. The patients seem to be happy, and well cared for. My GSD visits weekly and when he come in the smiles come out.
I think that I personally account for a significant amount of US spending on health care in 2010! I was healthy my entire life, and this year I’ve had three surgeries, multiple x-rays and scans, 16 weeks of chemo and 5 weeks of radiation. The EOB from my last surgery arrived yesterday: $11,000 in hospital charges from my last surgery (haven’t seen the surgeon’s bill yet), which was simple removal of the indwelling venous catheter they used to deliver my chemo. I was in the hospital for about three hours total, I asked the surgeon to do it under local because I hate anesthesia side effects, so I was able to get dressed immediately afterward and go home. The insurance paid $4600.
Thanks to all of the healthy among you for indirectly paying for my illness.
Love,
REhobbyist
This calls for a celebration. Here. Have a smoke or two on me.
LOL, denquiry. What should I smoke?
I want some of what Bernanke’s smokin’.
A rare treat. John Wayne True Grit Menthols.
I want some of what Bernanke’s smokin’.
———————————————————————
Bernake don’t use a bong. He uses a joo pipe.
$4600 paid to the hospital for a three hour stay for a procedure done under local? Not even including the surgeon’s time? And the bill was for $11,000. The total ‘retail’ bill for all your diagnostic and therapeutic events must be staggering.
If you didn’t have insurance you would have been billed for the entire amount, and expected to pay whatever amount you could negotiate the hospital down to, IF they were willing to do so. All this would likely have resulted in declaring bankruptcy for the average uninsured person. What astonishes me is that our system hasn’t already collapsed under the weight of this sorry mess. It astonishes me that even the people who run the for-profit insurance companies and every bloody hospital in this country have not come to the realization that this way of paying for health care cannot continue much longer. I guess it’s all about milking the system until it runs dry. Shalalalalala live for today.
$4600 paid to the hospital for a three hour stay for a procedure done under local?
———————————————————————-
Was that with or without the kickback?
I had a very serious medical issue a few years ago that landed me in the ICU for ~3 weeks. I was under for much of the time, so, certainly took a lot of resources from the hospital, and expected a high bill.
Not as high as the bill I got. I was close to 1/2 a million dollars for 3 weeks. I laughed, told them I had insurance, and threw the bill away. Next month another bill came; this time for 400K. Again, laughed, and threw it away. This process went on for ~18 months (a bill, with a different (always lower) amount would come, I’d call every few months, tell them I had insurance, and then throw the bill away).
Net result, 18 months later, a bill comes for 50 bucks (my co-pays), which, I pay. The insurance company settled my claim for (IIRC) about 40K.
So, a few things stick out here. How on earth can you send out a bill for 500K when the actual correct amount it 50 dollars? I mean.. We’re not even in the same ballpark here. They knew I had insurance, they had all that information! And, off by a factor of 100,000?!?!?
Why send out a bill for 500K if you’re really willing to accept 40K?
And, finally, what would have happened if I (like I’m sure some people do) opened that first bill and paid it? Would the hospital have refunded my money when the insurance company came in and paid the bill for me?
The system is beyond broken (for medical billing), it’s an absolute nightmare. A law should be passed that a hospital (or doctor) can’t send out ANY bill until they figure out what your insurance company will pay. Payment is between the insurance company and the hospital, not between the patient, insurance, and the hospital.
And, another law should be passed that, for customers paying with their own money (no insurance) that they automatically get the BEST negotiated rates. It’s criminal that we abuse those who are unable to get insurance the way that we do in this country.
Overtaxed,
Firstly ( glad to hear you got it resolved! ) and are doing well. Had a very similar experience, and yes, it ‘is’ perfectly ridiculous.
No other industry in America can get away w/ that bullcr@p. Only the med. field.
I know that around here, you pay more at a hospital if you pay cash. Insurance pays less. Seems to me that there should be a law that you pay no more than the insured rate. Why don’t I get a discount for cash?
Seems to me that there should be a law that you pay no more than the insured rate. Why don’t I get a discount for cash?
Seconded!
“Seems to me that there should be a law that you pay no more than the insured rate.”
Exactly. Why should we bend the folks over who, be definition, are the almost always going to be the least able to pay. A simple law that would have a profound impact on the collect ability of medical bills.
Here’s the simple fact. People don’t (normal people anyway) want to cheat/steal from each other. I’m very willing to pay a doctor to help me, and understand that the per hour costs are going to be high. But there’s a difference between 250/hour and 25K/hour. And, unfortunately, 25K/hour seems to be to more “going rate” for specialized medical services (assuming, of course, you don’t have insurance). That’s just robbery; it’s so expensive (and silly) that people feel absolutely no remorse telling the doc to “go stick it where the sun don’t shine” and walking on the bills. Medical bills even rate differently for credit purposes (unpaid medical bills count less against your credit score) because of the general knowledge that we’re basically looking at highway robbery when we go to a doctor.
1000 bucks an hour is nuts. But; that’s not even “high” by many surgery rates today. I realize there are several people in the room, and expensive tools being used. But 10X markup isn’t a reasonable number on a needed function for society.
No other industry in America can get away w/ that bullcr@p. Only the med. field.
Human Health as…Industry…interesting, very interesting indeed… ;-/
Net result, 18 months later, a bill comes for 50 bucks (my co-pays), which, I pay. The insurance company settled my claim for (IIRC) about 40K. ”
yep same here had low back surgery got a bill for 24K insurance paid 2500 dollars and I paid 300 bucks
medical billing is a bad joke
“medical billing is a bad joke”
It would be a bad joke if people’s live weren’t being ruined every day because of this awful system. Right now it’s about as funny as heart attack.
I want to check your reflexes. Can I send you the 20K bill for that?
I ran up a few bills myself as I too was diagnosed with cancer. Fortunatly, it is a varity that required no chemo or radiation. I will be getting CT every 3 months for the next 3 years though.
Darrell,
God be w/ you. Hope it goes well.
A retired physician told me he recently incurred a modest medical bill. He never payed it, and the bill magically disappeared. He says he thinks this was a result of courtesy being awarded to an ex-physician.
It is a good thing we do not run our fire departments like our medical industry here in the US. … “Mr Smith the flames are almost at your daughters feet. We need your house your bank accounts and all your credit cards so we can rescue her” Hurry Mr Smith time is running out!!!
We used to. No joke. And competing fire companies would acutally fight each other over who was going to put out the fire.
It’s why I have no respect for libertarians.
how our current healtchare system works…
You and four friends go out to dinner and agree to split the check before hand evenly. All five order the exact same entrée. Your friends decide they want to get the fabulously wonderful double chocolate fudge brownie sunday…a $ 10 dessert. You do not really want the dessert but you order it anyway…because after all…it’s only going to cost you $ 2.
Your analolgy is not correct. For most people, the ‘dessert ‘they have has been suggested by their doctor. Not saying that some of it is not necessary, but certainly not all of it.
You forgot the part where the restaurant charges you more than was stated on the menu while giving you smaller portions and when you ask to see the menu again, it’s a different one.
And the longer you stay in the restaurant, the less you get and the more it costs.
between myself and my employer I pay 20K per year for health insurance PPO the familiy plan this does not include what out of pocket and co-pays plus deductable I would pay if I went to a doctor
Crazy high I think no wonder we don’t like to hire full time employees here. We use alot of contractors.
I think next year I’m going with Kaiser
20K?! Holy moly. Really, you should just bank it. After 5 years, you have more than enough to deal almost ANY medical problem.
And you’ll be getting “some” kind of interest. But it will also be available for other emergencies if needed.
Do you have those options with the insurance company? Didn’t think so.
(20K. wow)
Eco, are you really telling cactus to not insure his children?
Living in California is expensive. Move out.
You wouldn’t pay anywhere near that in most states around the country. Except perhaps New York, where medial insurance also is outrageously high.
For the record - CT has the highest health insurance rates in the country. Hartford Courant article a couple months back. Sorree no linky.
Cactus - I Live in CA. I have had United Healthcare, Aetna, BC, on and on. I now have Kaiser.
Kaiser is excellent. It is how all healthcare should operate IMO.
I see all my labtests online when they become available to doc. I book appt with doc, usually same day. I see doc’s schedule and availability. They have excellent follow-up. Everything is automated.
If there was inter-state competition, perhaps more outfits would operate as does Kaiser. Consumer prices might drop markedly. Just a thought.
BTW, it seems that few people on this board recognize (publicly, at least) that insurance prices paid in places such as Conn., N.Y. and Calif. are NOT being paid by everyone else.
“…where does that “we’ve got the best health-care in the world” part come in?”
‘Cause we SAY SO, ya dang socialeest/commie!
A slump in government-backed mortgage bonds that’s sent yields to the highest level since May is threatening a recovery in the U.S. housing market, which had been bolstered by record-low borrowing costs.
Yields on Fannie Mae-guaranteed securities that most affect loan rates jumped as high as 4.21 percent yesterday, an increase of 1 percentage point from an all-time low in October, according to data compiled by Bloomberg. They ended New York trading at 4.1 percent.
Higher loan rates “won’t be fun” for a fragile housing market, said Scott Simon, head of mortgage bonds at Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund. “If you were looking at buying a house a few weeks ago, the same house, to you, looks as much as 9 percent more expensive,” he said.
“Higher loan rates “won’t be fun””
I think it will be fun. A friend of mine was bragging about buying his “investment” house with a 5year ARM at 3.75%. He, of course, claimed his new abode was worth 100K more than he paid. His plan is only to live there 4 years until his kid gets to school age. Then they are going to cash out and move to a better district. I can’t wait to see what it’s like for him to try to sell into 8% interest rates while staring at his new payment.
retail sales surge:
http://money.cnn.com/2010/12/14/news/economy/November_retail_sales/index.htm?cnn=yes&hpt=T2
lmao here folks.
Those “deep discounts” may not add up to profits.
His kid is destined to join a gang.
Hmmm, that’s an interesting prediction. And which WS investment bank-gang do you think he’ll join?
Yo,yo,yo! De “Dubya Street” homeboys be skimmin’ 6 P’cen offda top.
Dubya Street tagged de econ-o-me.
Aight, they be reprezentin!
“We need a big do-over. This little one sucks.”
That is what all articles similar to this one say to me.
i think it’s gonna be fun as hell…i want be able to remember the last time i had so much fun.
I think it will be fun.
He must not be a very good friend.
I have relatives who are looking at a reset THIS YEAR (bought in 2006) who didn’t grab the refi at the low. At this point, I figure they’re boned.
If he takes the risk, bets correctly and wins, I applaud him for taking the risk and winning.
What frosts my cookies is when someone like that loses, and the government steps in and wants to make me pay for his losses.
It’s heads, the banking / real estate cartel wins, tails, the taxpayer loses. It is amazing we have to pay for these shenanigans to protect the unholy trinity - banking, real estate and insurance.
Please, Please, Please, lets get back to interest rates towards 8%. It is time to earn some interest on savings.
This would also allow those of us with significant money for a down-payment to not have to compete with knuckleheads who are still getting to put 3-5% down.
i’ve been wondering. if CD and savings account rates were around 8%…wouldn’t that cause a surge in bank deposits and savings…and help to shore up bank balance sheets/reserves?
Banks can get all the cash they want/need from the Fed at, what, 1% interest?
And they know if things get any worse they will be rewarded every which way. Wouldn’t you love a business where you couldn’t possibly lose? How do I get in?
I’m with you, Captain.
back in the 60’s one could go to any bank and get 6% on their passbook savings accounts.
What was inflation back then? 3%?
From Tom’s Inflation Calculator:
1965 = 1.6%
1966 = 2.9%
1967 = 3.1%
1968 = 4.2%
1969 = 5.5%
1970 = 5.7%
Making mortgage loans is a little harder than putting money in a passbook savings accounts, but in the “real” hard-money mortgage market, I am still getting 7.8% on (new) 20-year notes secured by actual houses. I don’t have to do MHs any more, because now The Banks Aren’t Lending.
The borrowers have reasonable incomes but poor credit. They do pay at least 20% down.
More than once I’ve posted something on this board suggesting that there’s plenty of room in my niche for those of you who complain about the difficulty of getting a decent return on your money.
Captain john, do must still believe that your money actually belongs to you.
Housing Shaky as Lenders Tighten
By NICK TIMIRAOS
Economists are worried that the housing sector may be heading into another downdraft as mortgage lenders continue to tighten already restrictive lending standards.
Such a scenario seemed less likely earlier this year, when home-buyer tax credits fueled a surge in sales. But sales have plunged in the second half of the year after those credits expired. New and existing home sales were down by more than 25% in October from a year ago.
Meanwhile, applications for mortgages have hovered near their lowest levels in more than a decade since May, even though mortgage rates have tumbled to their lowest levels in 60 years, with average 30-year, fixed-rate loans bottoming at 4.21% in October.
“Originators are scared to death. We are being intensely cautious because we understand that the franchise could be on the line,” says Mr. Walters. He says tightening could continue “for at least a year, maybe longer.”
http://online.wsj.com/article/SB10001424052748703727804576011872478182318.html - 158k
“He says tightening could continue “for at least a year, maybe longer.”
No problem here, you’ve got all the snow and cold weather to help you escape the expected hordes of people wanting a mortgage.
Interesting how this is in direct contradiction to yesterday’s stories about how lending for purposes other than mortgages is loosening up. Ya think banks believe house prices are still headed down?
Wells Fargo cuts 137 Concord jobs
By George Avalos
Contra Costa Times
Posted: 12/13/2010 04:03:14 PM PST
Wells Fargo & Co. said Monday that it will shut its wholesale lending operations in Concord, a move that will eliminate more than 100 jobs.
The wholesale lending work currently being done in Concord will be shifted to the Orange County city of Irvine. San Francisco-based Wells Fargo will eliminate 137 jobs in Concord from its home mortgage operations.
They should move into the New Century building in Irvine, lots of space available there. /snark
Fewer U.S. Homes Were `Under Water’ in Third Quarter as Foreclosures Rose
By John Gittelsohn - Dec 13, 2010 12:05 PM ET
The number of U.S. homes worth less than the debt owed on them dropped in the third quarter, largely because of mounting foreclosures rather than a rise in property values, according to CoreLogic Inc.
About 10.8 million homes, or 22.5 percent of those with mortgages, were “underwater” as of Sept. 30, the Santa Ana, California-based real estate information company said in a report today. That was down from 11 million, or 23 percent, at the end of June, the third straight quarterly decline
“There are two ways to reduce negative equity,” Fleming said in a telephone interview today. “Price appreciation or disposition, which means people getting taken out of their homes. At the moment, there’s more disposition.”
http://www.bloomberg.com/news/2010-12-13/fewer-u-s-homes-were-under-water-in-third-quarter-as-foreclosures-rose.html -
“That was down from 11 million, or 23 percent, at the end of June, the third straight quarterly decline”
The NPR reporter on 6p news last night choked on the figure then botched it — said ‘11 thousand’ as though he couldn’t quite believe that 11 million U.S. homes could possibly be underwater. That is a truly staggering figure, especially if a significant percentage of these eventually go into foreclosure and come back on the market as affordably-priced homes.
“There are two ways to reduce negative equity,” Fleming said in a telephone interview today. “Price appreciation or disposition…”
Silly me- I thought paying down the loan balance was possible too.
“I thought paying down the loan balance was possible too.”
That`s Old School.
“I thought paying down the loan balance was possible too.”
Sorry, but we are only considering options within the realm of possibility. Please bear in mind that NOBODY HAS ANY MONEY!!!! (best Sam Kinnison voice).
Really odd how the only one of my clients who might be underwater DOES keep paying down the loan balance…as if she suspects she’s underwater and doesn’t want to be. The reason why one can’t really tell is that nothing on her street is for sale. Of course, I regard underwaterness (or possibility) as my problem, not hers…so I’m awfully grateful that she’s solving it for me.
U.S. Foreclosure Prevention Falling Short, Watchdog Panel Finds
A U.S. Treasury program aimed at preventing 3 million foreclosures is likely to fulfill less than a third of its goal, a congressional watchdog reported.
The Treasury’s homeowner aid effort is “ineffective” and has failed to hold mortgage companies accountable, the Congressional Oversight Panel for the Troubled Asset Relief Program said in a report released today.
“The program has turned out to be a lot smaller and have a lot less impact on the housing market than we expected,” said former U.S. Senator Ted Kaufman, the chairman of the panel.
Sellers of Seized U.S. Homes Target Australians as Currency Reaches Parity.
Seized U.S. Home Sellers Seek Lure Currency-Rich Australian
The median U.S. home price has declined 26 percent since a June 2007 peak to $170,500, according to data from Washington-based National Association of Realtors.
Vincent Selleck, whose Sydney-based 888 U.S. Real Estate started finding foreclosed U.S. homes a year ago for Australian investors, received almost half of all inquiries in the last two months.
“We’ve been swamped since the Australian dollar reached parity with the U.S. dollar,” said Selleck, 52, who handled 1,300 queries in the last 12 months, more than 530 of them in the past two. “At the beginning, people were quite skeptical. In the past two months, the spike we’ve seen is incredible.”
Selleck is among a growing number of real estate agents who have set up to lure Australians — who are armed with a currency that surpassed the U.S. dollar in October for the first time since 1982 — to buy in the U.S., where an average home costs 62 percent less than its local equivalent. Morgan Stanley estimates about 6.5 million U.S. homes face repossession, on top of the 2.5 million that have been seized since 2005.
Is this sort of like off shoring U.S, jobs, only in reverse?
Money over people. That’s the American way.
Lets give some of these poorly-built, ugly, overpriced crapshacks to Australian Mikey. He’ll eat anything. Mikey likes it!
Yes, Australia has a huge reservior of fearless specuvestors that have not gotten the memo yet. Being a slumlord is not fun; having your property on another continent, I can’t even imagine.
Shady property managers, deadbeat tenants, local laws that make it difficult to evict deadbeats, incompetent plumbers/roofers/handyman that charge a fortune for shoddy work. I can’t figure out why anybody would want to do that to themselves unless they are a masochist. there’s no surer way to lose money other than going to a strip bar; at least there you might have some fun in the process.
Mike in Miami
“Shady property managers…”
We live in Ca, between homes (feels like forever) and are stuff is in a self storage facility. My other half has the rental agreement in his name (yet I made the decision to rent there), and they treat me like dirt, won’t talk to me, acknowledge I’m alive, and treat my other half as a single. From what I understand, if we rented as tenants in common, liens become more complicated. So, I sign the checks, am entitled to 1/2 of community property, but our belongings are considered his property.
What would happen if Godforbid he died?
Anyone who has self storage in Ca, check the new law AB-655. It’s dangerous for tenants. “Proof Of Mailing” is all they need to start the lien clock. We just went through a lost in the mail check (not sure if we believe that), and it could have gotten ugly. Luckily, I always make sure all the checks clear. Our storage is with $10’s of $1,000’s.
The industry doesn’t allow title on a rental agreement to be a married couple on title. One spouse or the other.
storage wars is a new reality show where vultures prey on people’s storage units.
I’m not much for storage. I like sparsely populated closets and cupboards, so I make liberal use of Craigslist to get rid of things. Rarely do I regret getting rid of something.
Between homes, and storage includes a $15K Conservatory Grand (& Player) Piano. We couldn’t fit our stuff in our rental if we stacked it. We came out of nice sized home, modestly furnitured (not stuffed), but nicely done.
I’ll tell you, after we buy our tag toe home, I’m good until the end. Never moving again!
OMG, you need a pretty good unit to store that grand piano, don’t you? Can’t be the run-of-the-mill U-Store joint..
awaiting wipeout
I also sold near your area Moorpark CA in 2006 and now rent in Moorpark
deciding if I should start looking to buy or just wait it out lease is up in June.
So I asked our accountant Inflation or Deflation? He says deflation in the US inflation everywhere else. says he can buy clothes much cheaper here than in India. I think China is the same way now. Might be nice to own RE somtime in our future because if 1 billion Chinese and Indians decide they want to buy in Thousand Oaks and if they can afford it because of a weak dollar policy …
“Foreclosure Investment”: its Australian for Suckers-Bet.
Put another specuvestor on the barbie.
I can’t fathom the mindset that things landlording on another continent is a fun way to invest.
If I’m not mistaken they got goldman sachs and j. paulson as landlords and financial advisors.
I used to rent from a lady (in Tucson) who owned a house up in Scottsdale. To put it politely, that house (and its tenants) were a major pain in the patootie. And, IMHO, that situation was made worse by the fact that she was 125 miles away.
Faith~Rock of Gibraltar~Mustard Seed~Restless money~
Obama Said to Consider Yale President Levin for Top Economic Advisory Post.
President Barack Obama is considering Yale University President Richard Levin for a top economic post, possibly head of the National Economic Council or chairman of his outside advisory board, according to three people familiar with the matter.
Obama interviewed Levin last week at the White House. He is among the top three candidates to replace NEC Director Lawrence Summers, who plans to return to Harvard University at the end of the year, according to an administration official. Obama also is considering Roger Altman, the founder of Evercore Partners Inc., and Gene Sperling, an adviser to Treasury Secretary Timothy Geithner.
How about a gentile instead?
Like Henry Paulson?
Inflation increasing in UK led by food and clothing:
http://www.independent.co.uk/news/uk/home-news/record-surge-in-food-and-clothing-costs-drives-up-inflation-2159907.html
“The Consumer Prices Index (CPI) rate of inflation was 3.3% last month, up from 3.2% in October, the Office for National Statistics (ONS) said. The increase was driven by a 1.6% rise in food prices and 2% in clothing costs - the highest increases for both sectors in an October to November period since records began.”
“The rise in food prices was driven by an increase in flour, breakfast cereals and poultry costs. The ONS said there was anecdotal evidence to suggest crop problems seen in countries including Russia earlier this year could be contributing to the rise in food costs.”
“The City had predicted clothing prices to hold or even decrease in November, as retailers introduced discounts earlier than expected. But today’s figures reveal the cost of garments increased, including men’s casual jackets, men’s casual short-sleeve shirts and women’s formal wear. The higher cost of cotton - now at a 15-year-high - could explain the rising clothing prices, the ONS said.”
Don’t forget tuition increases.
At least they are somewhat honest about inflation. In US, it would be, what inflation?
Retail sales up 0.8% in the USA.
Gasoline prices up 0.8% in the USA.
Going sideways is still getting a little more expensive.
Molotov cocktails and tear gas prices also up big…
I wish the company that makes those clear plastic riot-shields the cops use would have an IPO. It could be bigger than GM.
“The one place Americans are willing to see sacrifice is in the wallets of the wealthy and Wall Street,” Bloomberg News relates.
“While Americans say they strongly support balancing the budget over the next 20 years, when offered a list of more than a dozen possible spending cuts or tax increases, majorities opposed every one of them except imposing a bigger burden on the rich.
“A majority backs raising the cap on earnings covered by the tax on the Social Security retirement program above the current limit of $107,000. Two-thirds would means test Social Security and Medicare benefits. Six of 10 would end tax cuts for the highest-earning Americans. And 7 of 10 favor a tax on Wall Street profits. “
It simply doesn’t matter what Americans think or want. The politicians will do whatever the banks tell them to do.
…and it doesn’t matter which party is in charge either. They all work for the same master. You would have to get bribes (called “lobbying”) out of politics to get any meaningful change. Unfortunately our Supreme Court said it is OK to bribe politicians. Therefore things will continue as usual until the feces hits the fan.
I mean in most so-called Democracies its is illegal to bribe politicians. While it happens, at least it happens in secrecy and it tends to end your career if caught.
I just saw a interesting tape called “THE SECRET OF OZ ” . Its basically
a solution for the money problems that the Bankers create .It goes back to the concept of the “Green Backs ” .If you can see the full
version of this tape it might be a answer ,I don’t know for sure .
As I recall the sentiment around TARP was running between No and Hell No. It passed anyway.
The people have no say in what gov does anymore. A high enough percentage of politicians are owned by the banks to thwart any populist agenda. It is only getting worse as the middle class is destroyed and wealth is concentrated in the top 0.1%. Good thing the tax cuts will be passed for the elite?? That Al Jazeera article said it all, they want the taxes low for the last wave of wealth extraction.
Sounds like the majority is starting to get it. Whatever will the Kochtopus do now?
“Whatever will the Kochtopus do now?”
Buy more congressman and senators. What else?
The progressives are pushing this Koch thing pretty hard, I wonder how many are on the Soros payroll. Rather than address his (Soros) subversive tactics and funding of anti-capitalist revolutionaries, we see efforts to create a right wing boogie man to deflect attention. Nice try.
The corporatists are pushing this socialist hobgoblin thing pretty hard, I wonder how many are on the corporate payroll. Rather than address corporate funded subversive tactics and funding of anti-democracy revolutionaries, we see efforts to create a communist boogie man to deflect attention. Nice try.
See how that works?
I would like to get on the Soros payroll. George? You out there? Call me! Let’s do lunch! Low six figures, baby- I’m in Flyover!
Check this out Nick. It’s from a leading Libertarian:
http://www.lewrockwell.com/gordon/gordon37.html
You can’t blame the majority, since median family income is falling, while incomes for the top earners have gone through the roof. The only way to even the score would be to force the top to pay more in taxes. But that’s not happening. At least not in 2011.
It would be very simple and fair to have everyone pay SS tax on all their income instead of just the first $100,000.
“It would be very simple and fair to have everyone pay SS tax on all their income instead of just the first $100,000.”
simple yes, fair? only if you believe that redistributing the wealth is fair.
I pay SS tax on 100% of my income. Why should Warren Buffet be treated any different than me? In my book that’s discrimination.
Warren Buffett, if he collects social security at all, will only earn about 0.000000000000001% of his income. For this he should pay 6.5% or whatever it is?
The question is, do you believe that the rise in executive pay relative to other pay is the result of a free and fair market? Or the result of executives serving on each other’s boards and scratching each other’s backs while paying a 2.0% dividend yield on the S&P 500?
I believe the latter. The only question is whether that excess pay should be redistributed via tax, or made to go away with dividends increased instead.
Why do you need “belief” for something that is a fact?
How about let’s make the redistribution fair by forcing Wall Street firms the Fed bailed out pay 100% back tax on any profits determined to be due to their access to ZIRP financing when the rest of the U.S.A. was under the bus, financially speaking.
…by forcing Wall Street firms the Fed bailed out pay 100% back tax on any profits…
Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)
Good idea!
Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)
Darn good idea…
don’t hurt yerself, Hwy…;)
I’m pretty sure I hurt myself laughing.
Keep dreaming, folks. And don’t hold your breath.
Meanwhile, would you like some cake?
its not the tax rate on earned inome/W-2 income that is creating the disparity.
it’s the very low rates on dividends and capital gains.
not one single person mentions this.
and it pisses me off.
It’s both and then some.
The rich pay less percentage of income tax after deductions, than most of the middle class.
And (here’s the fun part!) they often have their corporations actually pay their personal income tax for them.
“Don’t Cry For Me Argentina…”
“Simple yes, fair? only if you believe that redistributing the wealth is fair.”
This is Charlie’s worn out code language. What he’s really saying is the wealthy elite “deserve” a free ride at the expense of us peons and peasants.
Some do some don’t. Would be nice if our tax was structured that way. Money earned from gambling in Wallstreet casion will be taxed 80% and money earned from providing a service or product to better mankind will be taxed 10%. CEO and upper management salaries wil be taxed 80% if there’s a funny accounting and massive layoffs and such, if not tax rate will be 10%.
butters,
Close… If a shareHOLDER has an equity stake in a company oh… for a generation or two, then their tax rate should be effectively nil.
Want to do short-term flips? Be it RE, stocks whatever, then be prepared to fork over a major chunk of it!
As long as we’re reinforcing long-term ownership ( i.e actual job creation ) then I’ve no qualms w/ it. Why should we bend over backwards to accom. ST-traderz?
Charlie, taxing only the first $100K of income redistributes the wealth to the wealthy.
taxing income = income taxes
ss = retirement investment
forcing one class to pay more for their retirements then they are entitled to collect is in fact redistribution.
why not drop the charade and end ss taxes altogether? just increase income taxes another 15% to cover it. if its not a retirement contribution why pretend?
Shift the entire 15% SS obligation onto wage earners?
Isn’t that always your solution Charlie? Would you please take a moment and explain to us your contempt for wage earning people?
i have no contempt for wage earners. wage earners already pay 15% for ss/medicare even if 1/2 of it is hidden.
my point is if you want the rich to pay ss on all their earnings be honest about it and call it income tax and not ss.
No. Wage earners pay 7.5% and employer 7.5%. Why do you want that entire burden shifted to the wage earner?
my point is if you want the rich to pay ss on all their earnings be honest about it and call it income tax and not ss.”
Income tax that can’t be changed by 401K contributions, deductions, etc. its a pretty stout tax and I’m sure the government thanks us for letting them spend the surplus all these years.
Surplus is ending so what are you going to do? end it? Good luck.
Nope they will raise the social security tax limit they did it before. I’ll be suprised if the wealthly have enough votes to prevent this but hey they got the Bush tax cuts extended so anything is possible.
simple yes, fair? only if you believe that redistributing the wealth is fair.
Of course “redistributing” wealth is totally fair, just and needed. It’s not even redistributing. It’s re-redistributing the wealth back to the middle-class.
This wealth was stolen from the middle-class and should be given back to bring the levels of wealth distribution back to the levels of the 40s, 50’s, 60s, and 70’s. America was most strong during periods of more equal wealth distribution.
This new “trickle-down” scheme was a failed experiment.
Why does the right cry “redistributing wealth” when the concept is to give back stolen money to the middle-class but did not cry “redistributing wealth” when it was to redistribute middle-class money to the rich?
Do they miss something in the concept?
earned…hard working wealth in a production based economy equals good.
un-earned income and gains in a FIRE based economy equals bad.
not making the distinction equals…
40s, 50’s, 60s, and 70’s. America was most strong during periods of more equal wealth distribution.
America wasn’t strong because of the higher taxes. America was stronger because we had no competition. The biggest competion, Europe was still rebuilding after the ravages of 2nd world war and the rest of the world was in dark, may be except Japan.
That is quite the lame and false attribution.
The only European super power that had any substantial “rebuilding” was Germany. By 1951 their GPD grew every year.
Absolute rubbish.
So Japan and Germany started gaining on us because we lowered taxes on rich?
Those are facts that address your false assertion that we had no competition 1950-1970’s. Whether you agree or not has no bearing on those facts.
We may have had little competition, but at the same time, there was a lot less trade, so that that competitive advantage meant relatively less.
How fierce would the competition be from these European Socialist “super powers” without the direct or de facto support of the US military? Those countries would collapse if they had to pay for their own defense.
And you’d collapse if you had to use the brain God gave you.
And how fierce would the US military be without the ability to project power from bases inside those NATO alliance countries?
Redistribution of wealth in this country is upward to banksters. They pay a lower effective tax rate than the upper middle class and through deregulation have been allowed to steal from the middle class. Through the FED they have been bailed out when they incur gambling losses. It amazes me that they have stooges that still support them.
Bernie Sandars gave a nice summary of things. He pointed out that the Walton family of Wallmart stands to gain 36billion from the estate tax cut alone. You can see that they could spend 100,000,000 to push for the cut and it would be a rounding error in their net wealth. 100,000,000 that they could pay off politicians with. Now add in all of the Hedge Fund Wall Street criminals and you can see how easy it is for them to take over our government.
Now a politicians who don’t do their bidding would have to solicit political contributions from the middle class. How much time and energy would that take.
Our gov is bought and paid for now.
through deregulation have been allowed to steal from the middle class.
What are those deregulations? Let’s hear about them. I don’t think the partial repeal of Glass Steegal accounts for all that happened in last 3 decades. May be it’s the regulation created to protect certain interests deserve some of the blames?
I don’t think the partial repeal of Glass Steegal accounts for all that happened in last 3 decades.
Why not? Just saying you don’t think it’s so, doesn’t make it not so. How would we have had a bubble and bailout of this size without the repeal?
Deregulation of trade/immigration also had a big role. Unreciprocated free trade caused a lot of jobs to go overseas, while unchecked illegal immigration/H1B/L1 guest workers flooded the labor market.
Both of these helped drive down the wages of middle class workers.
Wikipedia - deregulation
The Internet, how does it work?!
I believe in raising the cap on SS tax contributions, but if they do that then means testing should be non-starter.
There already is a cap on max SS benefits you can receive.
Paying SS tax on income greater than 100k is means testing.
Uncap the SS benefits. If the rich die before they reach J6P retirement age then they don’t collect a dime of what they have paid in. Just like J6P. And just think the feds gets to get that real valuable large sum of money now and the rich taxpayer gets cheaper inflated devalued money later. Just like J6P. See. Ponzi schemes are diverse. They treat the poor, average, and rich taxpayers the same.
I’m sorry Steve, I’ll try to be clearer. Right now the payroll tax for SS on earnings is capped up to $106,000. I’m for taxing ALL earnings ( doing away with the cap) and throwing (any future) idea of means testing (on retirement income) out with the garbage. IOW, I’ve contributed over $100,000 to SS, over the last 39 years ( what would that be with interest?) and I would like some of it back.
IOW, I’ve contributed over $100,000 to SS, over the last 39 years ( what would that be with interest?) and I would like some of it back.
Good point! I haven’t contributed anywhere near that much, but far be it from me to say that you shouldn’t get some of the money back.
Only fair if there is no upper limit on SS benefits.
We will definitely see an increase in the cap but to say 250k. Again more taxes on the middle and upper middle class to pay for bailouts and tax breaks for the elite.
When?
Congress and a Democratic President is about to pass a 2% cut on SS taxes for 2011. I could see reducing the employers tax bill as a potential inducement for hiring (although even at a 100K salary, 2K probably isn’t enough to stimulate hiring especially with great increases in health insurance costs) but 2% to the employee? Am I the only one who thinks December 2011 is going to be a rerun of 2011 - vote for extending the Obama SS tax decrease or demonstrate your callous disregard for the 10% of Americans (20% in actuality) who are unemployed - just as we begin a Presidential election cycle!
Congress and a Democratic President is about to pass a 2% cut on SS taxes for 2011.”
Treasuries are about to be downgraded too
Dollar keeps going down and infaltion will eat away that 2% pretty fast
That’s only for one year and then it sunsets in 2012.
“It would be very simple and fair to have everyone pay SS tax on all their income instead of just the first $100,000.”
SS isn’t a tax, it’s a forced savings program (well, in theory anyway). The more you pay in, the more you get. It’s only fair to continue to tax people above 100K if the benefits keep getting bigger as well, otherwise it’s just an income redistribution method, and no longer a savings program.
The reason you don’t pay anymore over 106K is because you’ve already paid enough to get the max benefit. It’s having 1M/1M coverage on your car; once you get to that point; you CAN’T pay anymore because the insurance company (US government, in this case) doesn’t have a “bigger” policy to offer you.
I think of SS as an insurance benefits program. Remember, disabled people who can’t work don’t pay in but collect, as do minor children of workers who die (but don’t get me started on the able-bodied people out there who are collecting!) And they do call it a “payroll tax.”
I don’t know any ‘Poor’ people that hire people !
Nor too many “rich” who do these days either.
Hedge fund managers only pay 15% tax on the income they “earn” from managing money. This is not dividends or capital gains where an investor is putting money at risk — this is Wall Street sharks using other people money and skimming off huge fees.
http://en.wikipedia.org/wiki/Carried_interest#United_States
While there’s tons of brouhaha about $250K Bush Tax Cuts, notice absolutely nobody talks about this. Basically, the entire affair is a distraction while those in power continue to ram right through tax loopholes.
Bend over please?
Flat tax. Same rate on all income, interest, dividends and capital gains. Get rid of the separate employment tax (SS and medicare). Tax stock options and other deferred compensation as of the day they vest, based on the then-current price of the stock or other underlying asset.
No deductions, just a personal exemption similar to the existing structure. The lowest exemption would be set to the Federal minimum hourly wage x 2000 (full-time working hours in a year) so that everyone who makes more than the minimum wage has “skin in the game.”
Consequences: Reluctance of the govt to raise the minimum wage as it results in less taxes coming in, far less mis-allocation of capital as the housing deductions go away and all income is treated the same, and more concern with what the govt is doing with your money, as nearly all (instead of only about half of all) workers pay income taxes. Others?
“Tax stock options and other deferred compensation as of the day they vest, based on the then-current price of the stock or other underlying asset.”
I agree with most of what you say above. But, just as an FYI; this is already the way it works for options/stock vests. The day it vests they take the closing price, multiply by the number of shares, and then add that to regular income. There’s no magic here, at least not in my company (where I get stock vests 2X a year).
It is very fair, however I doubt that this is can be done. In democracy, I wonder how everybody has saying in redistribute other people’s money. Maybe it is a fatal flaw, maybe it is not intended in the beginning, but it devolved.
Say most people are poorer than average since wealth is concentrated in rich. If someone say we tax income as brackets, the higher you earn the higher your tax rate is, and use the money to feed government and save a few ill-run banks at times, etc. It will surely pass, as most will be thinking that tax will be higher for others thus benefiting themselves. The super rich may have ways to deduct tax as business expense or other leeway, for mid class there is not much escape. You even be hit by AMT very soon if you have two earner in the family.
This sucks, I support flat tax but I believe it will be only in my dream. Life goes on, good luck to you all.
And now that we have so many ultra-wealthy, it wouldn’t hurt to establish higher tax brackets. Why not a tax bracket of people that make more than a million per year? 10 million per year?
You should run for president.
Fair Tax. 0% tax on income, dividends, capital gains for individuals and corporations. Have a large sales tax instead. The percentage could be fixed across the board, or adjustable depending on the product.
Simplest way would be to have a fixed percentage, which would have to be computed so that it balances the budget (in fact, it could be adjustable every year; the only tax “policy” required). Say it was decided to be 35%. This would automatically raise the price of everything by 35%.
Assume wages stay the same. The flaw in the above system is that poor people (those who wouldn’t have paid taxes anyway) are screwed because their cost of living just went up 35%. Solution: have a sales tax rebate for the first $10000 paid in sales tax. This means that you can spend up to $30000 tax-free. This amounts to about $2500 of tax-free spending a month. Should be enough for basic necessities. All these numbers can be tweaked, anyway.
What is the outcome? For starters, nobody has to file taxes anymore. Thus a HUGE amount of waste is eliminated from the system, and all that saved time and energy can be put to productive use.
Second, low-volume consumers do not have to pay any taxes. This includes both the poor person who does not have much money AS WELL AS the rich or wannabe-rich guy who is willing to starve and/or sacrifice pleasures in order to save up or invest their money in productive ventures (both being good for the economy).
Third, big spenders get to pay more taxes than normal. If they don’t like it, they have the ability to stop the bleeding by cutting down on their spending. In fact, this built-in mechanism of self-regulation is very much in tune with the libertarian principles of our founding fathers. Ie, each taxpayer/consumer gets to decide his/her own philosophy, knowing in advance what the fiscal implications will be.
One might argue that the tendency might be for everyone to cut back on their spending in order to preserve cash, and this collective action will kill economic growth because nobody will be buying anything. To this, I counter that
(a) accumulation of savings is a GOOD thing because they can be invested in productive ventures which can be export-oriented and thus help drive down the deficit and help reduce the national debt. Note that investors will have HUGE incentives to pile money into business because there is no tax to pay on their profits.
(b) The average American consumer will still continue to buy stuff. They might stop buying crappy stuff from China that even they figure it’s not worth paying 35% extra for, but isn’t that a good thing for the US too?
I do feel that overall the tax revenues will decrease, but it will hopefully force the govt to shrink, which is good; if not, they can simply increase the sales tax rate to 40% or 50% or 60% or whatever it takes to balance the budget. And people can “retaliate” by cutting down on spending further and keeping 100% of their hard-earned money regardless. When the govt realizes that raising the sales tax to 60% actually results in LESS tax revenue, they will lower it. Thus we get price equilibrium which we, the collective consumers, play a large part in controlling.
Again, if I am opposed to the high tax rate, I just grab my $30k in tax-free spending and keep 100% of my earnings if I have to.
Note that welfare, unemployment bennies, public education, free healthcare, etc, are not part of this equation. Those are part of what the govt decides to do or not do with the taxes it collects. Some or all of these could be built into the budget. Personally I would abolish all of them, along with the Federal Reserve, taxpayer-funded bailouts, Freddie/Fannie/FHA, IRS (most of it), overextended military, etc, etc. Channel more funds into foreign diplomacy, border security, antitrust laws, anti-fraud laws and essential services such as emergency, fire, police. Finally, remove the lobbying power of large corporations to control policy (eg. food, financials, auto, etc) by expressly prohibiting campaign contributions from corporations to politicians, period.
Sorry I got a bit sidetracked there, my main point was to support the Fair Tax. You can check out the “official” site for it - http://www.fairtax.org.
Bunk.
Sales tax destroys the poor and lower middle class as the “big spenders” actually spend less of a percentage of their income.
For proof, just look at the data of all the states that ALREADY have a sales tax.
I absolutely do not understand why a regressive tax would be considered “fair.”
I see beggars at the intersections, out with their cups in frigid weather. I once saw a guy sit down at a busy intersection, feet in the road because there was no flat island, but a half oval hump designed to keep beggars away, and start eating a meal. On the other hand, there are people like Buffet who can’t draw down their wealth as quickly as they want because their investments have too high a rate of return.
(BTW, I don’t give to the beggars because I don’t want to encourage panhandling. Few that know me consider me a bleeding heart. I support retributive punishment, personal responsibility (don’t have kids if you can’t support yourself), and think that business, if it’s not looting the public treasury in the warped system we have now, plays an essential role in society to increase wealth and thus standard of living.)
These are the two most extreme cases, but I utterly reject those at the bottom end of the economic ladder being forced to pay a larger percentage of their income than those higher up. I see people trying to call it fair, but it is utterly regressive.
Lesser Fool points out one really important characteristic of a good tax policy — that people should be able to make decisions “knowing in advance” what the tax consequences will be.
The very worst thing about our system is that it changes every single year. Tax planning is literally impossible. I don’t know how this can be stopped, but it’s one of the reasons why lower taxes and less govt spending are appealing: if the tax take isn’t very much to begin with, the fact that they jerk it around all the time becomes less important.
Set tax policy any damn way you want it. Tax the rich, the poor, the in betweens. Just do these two things, and I’ll gladly accept the result:
(1) No withholding tax. Pay it directly, cash, check, or CC.
(2) Move the tax filing date from April 15 to the first Monday in November.
Get rid of the illegal aliens. Cost $45 billion to ship out, Save $350 billion per year. Net first year $305 billion.Could be more with more jobs available. Sell Panera bread short. hahahahahaha
http://www.baltimoresun.com/business/real-estate/bs-bz-hopkins-great-recession-20101213,0,6043136.story
“A variety of Baltimore neighborhoods ended the roller-coaster ride of the past decade with significantly higher home values than at the start, but some communities saw all the gains of the housing bubble erased by the bust.”
“They’ve gone back to where they were in the beginning,” Sandra Newman, a Johns Hopkins professor of policy studies who oversaw the research, said of the two neighborhoods. The research results will be presented Tuesday to city leaders.”
And this link shows a chart with prices/change info from 2000 - present in some Baltimore neighborhoods:
http://weblogs.baltimoresun.com/business/realestate/blog/2010/12/how_baltimore_neighborhoods_fared_in_the_2000s.html
It was interesting that there was one low-priced neighborhood that retained its value over the past four years. In the article the explanation was that it is populated by people who care about their neighborhood. Interesting.
A Christmas feeding frenzy question…Is it possible that the tendancy to spend so much is a form of self-therapy for seasonal affective disorder? Are people just trying to get through a time of mild depression by subbing the stimulation of purchases for the stimulation of light? I guess not as I don’t think that the problem is worse in Maine than it is in Florida, or anything like that, but it seems so odd to me. I’ve nver been much impacted by SAD, though I do need another lamp or two in this apartment. The windows face east so I lose my direct light pretty early.
how did you like those BBY numbers? I think WMT is cutting into the margins a wee bit.
Don’t Walmart and the warehouse clubs often get stocked with items that are unique to their stores (at least with item identification number, possibly with slightly different specs also) so that people can’t go to other stores with ads and get the prices matched? I’m sure I head that, though it was a while ago.
Yup, they do that.
I think they need Circuit City to go bankrupt again to boost thier sales.
“Is it possible that the tendancy to spend so much is a form of self-therapy for seasonal affective disorder?”
Its possible, but I don’t think that is the case for the vast majority of people. Here in Chicagoland, winter weather didn’t really kick in until after Thanksgiving. Around late January/February even people not prone to SAD will be fed up with winter.
Folks might be motivated by the great deals at this time of year. I’m seeing several (somewhat) larger-ticket items that have been on my wish list for a while at really fantastic prices, many with free shipping too. Unfortunately for the retailers, I’m not the kind to go out and buy everything at once, so I will have to pass over many of these deals. Folks with a little less self-restraint… well, I can easily see them going wild and ending up broke and in debt after the holidays.
Is it possible that the tendancy to spend so much is a form of self-therapy for seasonal affective disorder?
I agree- a winter solstice holiday that involves stringing lights and tinsel everywhere, and preoccupying ourselves buying gifts and preparing a feast for everyone, was clearly designed (originally, subconsciously) to distract us from the ever. increasing. Darkness. And to celebrate the beginning of its end- the solstice. Madison Ave has capitalized on this collective instinct quite successfully.
How does SAD work in the Southern Hemisphere? Do the people in Austrailia and Brasil go on shopping sprees in December? Do they in June?
Anyone know?
How does SAD work in the Southern Hemisphere?
I don’t know about Brazil if cold has anything to do with it because Brazil has no place at all with winters that resemble USA’s Mid-West or North East. None. There are a few places that might get a light dusting of snow every couple years but that’s it.
And rich Brazilians like to shop but not as much as Americans.
Well, yeah alpha. On the other hand, xmas and thanksgiving are the only days when everyone in the family doesn’t have to work and we can all get together and eat. I’m grateful for holidays.
My nephew and niece on my husband’s side work in retail and I always feel sorry for them that they have to work early in the morning after each holiday.
Sounds like a plausible theory to me.
No Polly, I think that most Christmas giving is out of love. Problem is they can’t afford it. The SAD is probably from the bills!
SAD is from thinking about all the credit card bills showing up in january.
What’s SAD? Standard American Diet?
Seasonal Affective Disorder.
Approaching age 50, I find seasonal changes are hitting me harder. I had trouble getting to sleep over the summer, and was waking up early. And for the past month I’ve been tired all the time.
But I don’t think spending has anything to do with it. Shopping for Chirstmas is a burden to me.
For those who enjoy it, I think that in a country where everyone is yelling “me, me, me” all the time, shopping is a chance to have someone else serve them.
WT,
Melatonin. Start liking it! ‘Approaching’ 50..? I remember when I was approaching 50, we didn’t lay about complaining about it either?
Approaching 50? Lucky you! Wait ’til you’re approaching 70.
I won’t live that long cause I got obamacare and a death panel has my SSN.
I had trouble getting to sleep over the summer, and was waking up early. And for the past month I’ve been tired all the time.
Two words - Jack Daniels
I just turned 50 and find my extra fat has become good freinds with my midline and doesn’t want to leave.
“the windows face east”
Ha! You should be so lucky..? When we were kids growing up we didn’t have windows at ALL! In fact we didn’t even have floors, you had to cling to the walls! ( Seasonal Affective… I’ll give YOU Seasonal… )
Yeah, here in Oregon they should come ’standard’ when you buy a treadmill to ensure at least it will get ’some’ use.
polly,
( From yesterday )
Thanks for sharing “what it isn’t”. I’d like to reach a point where I at least know enough to ask a question?
One of my favorite scenes is when Jon Favreau and Vince Vaughn are discussing the nature of their friendship and Jon finally works up the nerve to confront him about its shortcomings.
“The only TIME we see a White Sox game ( is when they’re playing the Cubs! )” I think that unfortunately describes the very relationship I’ve had w/ my Jewish friends over the years? I’ve always been willing to meet them halfway… ( as long as the ‘common ground’ was mine? )
Happy… whatever it is that you call it! Now let’s get drunk and talk about what a PAIN it is to have a Filipina wife!
“Is it possible that the tendancy to spend so much is a form of self-therapy for seasonal affective disorder?”
Possible? It’s a proven scientific fact.
Google “shopping as therapy” and look for the legit studies from universities or famous science organizations.
Also known as Oniomania.
Interesting angle. I think cultures with significant winters have probably always had festivals at the darkest part of winter - the solstice, with the shortest day - to cheer themselves up.
Hold on a minute! I thought the Canadians had it figured out, and were no where near the indebted spendthrifts Americans were.
Item: Canadians Getting Deeper in Debt Than U.S. Sparks Policy Makers’ Warnings.
Canada’s top economic officials yesterday urged households to be wary of taking on too much debt after data showed the indebtedness of Canadians surpassed U.S. levels for the first time in 12 years.
Bank of Canada Governor Mark Carney, Finance Minister Jim Flaherty and Prime Minister Stephen Harper said in separate public appearances that they are concerned about rising debt. The ratio of household debt to disposable income in Canada was 1.48 in the third quarter according to Statistics Canada, exceeding the U.S. level of 1.47.
“Our parents were more inclined to pay off that mortgage as soon as possible, and some Canadians are not as inclined to do that now,” Flaherty told reporters yesterday. “I encourage them to do it.”
If Carney, Harper and Flagherty were serious they would raise interest rates, cancel 5/35 mortgages and pop this bubble. Canadians now are in debt to the tune of 148% of income. Looks good on us as we have always said, it can’t happen here.
That’s why the USA is in such bad shape. B. Frank like debt orgies.
Canada off the list of my potential countries to sneak in if SHTF.
Huge, huge, huge housing bubble in Canada.
Sales are slowing as we speak - it will blow pretty soon.
And PS - Banks ALREADY have a built in TARP guarantee from the government.
The loonie is going to get hit hard.
Good thing that US banks aren’t intertwined in any way with Canadian banks.
http://www.politico.com/news/stories/1210/46325.html
Republicans who ran against Obama’s fiscal irresponsibility have lost no time becoming his eager co-conspirators in racking up trillions in new government spending and debt. As I told you they would.
Romney: Why tax cut is a bad deal
http://www.usatoday.com/news/opinion/forum/2010-12-14-column14_ST_N.htm?loc=interstitialskip
it remains to be seen sammy, of course the majority of this “spending” is a failure to increase the rate of confiscation. that’s just doubletalk.
the rest of this spending is contrary to the mandate from the recent election, hopefully the newly elected as well as some of the old guard will turn this deal down, what’s a few more days?
the idea of a 2 year extension is a joke as well, that is too short term for buisness planning.
Methinks that, through media publicity like this, Mitt is positioning himself for a 2012 presidential bid.
Correct, Slim. He can run against the Republican congresscritters. The problem is that almost none of the current R congress are planning to run for president so it won’t give him an advantage over anyone but Mike Pence.
I’ve always tried to be optimistic. But the latest spending binge with no means of paying for by adding nearly a $trillion to the national debt has finally convinced me that our economy is doomed, the question is not if, just when.
I worry greatly about my kids.
“By now no one should be surprised by the Republican Party’s dementia when dealing with the debt. After all, this is the same party who campaigned forever on fiscal restraint before turning a a $155 billion surplus and turned it into a $1 trillion dollar deficit.”
“Heheeheheehee,…see ya!” (an anonymous Shrub somewhere in Tayhos)
sab•o•tage:
2. Treacherous action to defeat or hinder a cause or an endeavor; deliberate subversion.
tr.v. sab•o•taged, sab•o•tag•ing, sab•o•tag•es:
You can count on politicians to vote one way - in their own personal interest. I find this normal and natural.
The problem is with the people who elect them.
http://economictimes.indiatimes.com/news/news-by-industry/jobs/India-Inc-brings-out-the-goodies-Bonuses-seen-hitting-200/articleshow/7056367.cms
India is offering 200% bonuses. Here we are fighting to keep jobs even at lower salaries. Wtf is happening. Is everything just pouring into BRIC countries and people here will have long term suffering. Or these countries are in a big bubble that will make them suffer for a decade like USA.
America has the the highest bribe cost index in the whole wide world. Our politicians and their masterwankers (ehhh, master bankers) don’t come cheap.
Or perhaps masterbanker might be a more appropriate term after all.
The masterbankers got our TARP money.
T = taxpayers
A = are
R= really
P= poor
T = Truths
A = Are
R = Really
P = Pretend
T = taxpayers
A = are
R = really
P = PWNED!
India is no shirker when it comes to bribes.
Not suffer like us for a long time to come. But they will have their corrections. The growth capacity is just too much in those countries for next 2/3 decades. After that, America is back, baby!
Meanwhile we have to suffer for the rest of our lives? F&*K THAT!
Don’t get mislead by the number. “100%” is basically one month’s salary, which is pretty standard over there.
Mexicans get 1/2 months extra at year end plus profit sharing. By law.
Just curious, how do you know so much about Mexcico? You seem to have great insights about Mexico. Always helpful.
And of course Mexico is a shining example of a thriving economy with a high standard of living for the general populace.
None of the above, Martin.
There is a very long history of those countries that involves being exploited by foreign nations and how they have learned that very hard lesson and now know that a strong middle class is their best path for national strategic interests.
Here we think “rich” is in our best strategic interest. Which has translated into fascism.
* BUSINESS
* DECEMBER 13, 2010
Austerity, Wall Street-Style
Booking Yachts Is Out, Carpooling on Private Jets Is In as Boffo Pay Ticks Lower
By ROBERT FRANK
In Christmases past, the top bankers on Wall Street would often load their families onto a private jet and head to the beaches of St. Barts or slopes of Aspen for the holidays.
This holiday season, many Wall Streeters are flying commercial, according to jet brokers. Those who are still flying private are jet-pooling with strangers to cut costs. Some are even skipping the catered in-flight meals, which can cost $1,000 or more for four people.
“They’re telling me, ‘We’ll just bring our own lunch,’ ” said Ricky Sitomer, chief executive of Blue Star Jets, a private-jet charter company. “They still want to travel in luxury, but they want the best value they can get.”
Austerity is a relative concept on Wall Street, where year-end bonuses are measured in “bucks” (millions) and flying private is often considered a basic human need. Yet this year, amid the largest decline in bonuses since the onset of the financial crisis, the Street’s big spenders are reining in their seasonal shopping spree in favor of more restrained indulgence. Brown-bag lunches aboard the Gulfstream are just the start.
December is usually a time when bankers crowd the showrooms and aisles shopping for their next big bonus toys. But jewelers, sports-car dealers and yacht brokers say bankers this Christmas are hard to find.
“We haven’t seen them come in yet,” says Jeff Drajin, looking out over a largely empty showroom at Manhattan Motorcars. Mr. Drajin, who sells Lamborghinis, Bentleys and Lotuses, says that in the good old days of 2007 and even 2009, December would see bankers start pouring in. “This year is different. It’s a little quiet.”
…
Bailout logic debunked:
Just because the global financial system did not suffer an all-out collapse after the Fall 2008 bailouts does not imply the system would have collapsed without bailouts. This is an untested assumption of the bailout’s defenders.
But a lot of systemically important investment banks that perpetrated the crisis would have been far less profitable in 2009 than they were, thanks to the bailouts.
Yahoo to Lay off More Than 600 Staffers: Sources
SAN FRANCISCO (Reuters) - Yahoo Inc plans to lay off more than 600 employees as early as Tuesday, two sources familiar with the situation said on Monday.
bummer I thought we were in a recovery economy and bull market for stocks?
I guess BBY isnt selling any flat screens thanks to walmart stepping up its electronic dept.
Note to Yahoo. PSST…if you hire temporary help you don’t have to pay bennies. And if you move those jobs to china you can get child labor for even cheaper. No IRS to jack with. and no OSHA to f*ck around with and no environmental laws to deal with. Yea it’s a lot f*ckin easier to make a buck in china. I now can see why our fearless leaders want us to be a lot more like china.
The family of the founders escaped China. I am sure he is aware of what can be accomplished there.
What’s a Yahoo? I guess I’ll have to Google it to find out.
Tweet us what you find.
I think it was named for ocean swimming from mainland china to taiwan. Yahoo is the victory cry for that swim. Once touching Taiwanese soil the chinese say, “Yahoo, I made it.”
This is funny…
Agency decides it can’t afford to stay in S.F.
After almost 100 years, the State Compensation Insurance Fund is pulling 755 of its 830 jobs out of town, having determined that San Francisco is just too expensive - and its workforce too dumb - for the agency to continue doing most of its business here.
Workers called to a recent meeting at the Herbst Theatre were told that 293 jobs will move to Pleasanton, 422 to Vacaville and 40 to Sacramento, with 75 employees remaining in the city.
“It’s part of a whole geographic strategy to reduce our footprint in high-cost areas like San Francisco,” said agency spokeswoman Jennifer Vargen.
They ought to go to Mojave.
Sounds like what happened in San Diego last week, the Navy said they were relocating one of their aircraft carriers to Washington state because it would save tax payers 100 million a year.
My entire downtown condo is filled with Naval Aviators and it isn’t cheap rent. It will be interesting to see what happens to rent prices once a full aircraft carrier full of people leaves town. I was always competing with Navy renters and one of them told me every month they got a stipend for rent, “use it or lose it” so guess what all the market rents are around San Diego bases, yep, the max the government would pay, I couldn’t compete with that. So many of them had fake marriages just to bump up this stipend they told me.
Best Buy Earnings Miss on Surprise Sales Weakness
Top consumer electronics chain Best Buy reported lower-than-expected quarterly profit on a surprise drop in sales at established stores and a decline in its U.S. market share.
The lackluster report from the retailer seen as a bellwether in consumer electronics pushed its shares down more than 10 percent in premarket trade and cast a shadow on the strength of the recovery in the consumer-driven U.S. economy.
I’ll confess to not darkening the doorway of Best Buy for a couple of years.
ISTR that a lot of HBB-ers don’t care for this store because of the sales staff. Specifically, their endless efforts to sell useless extended warranties and their upsells to stuff you haven’t the slightest interest in.
That, and the fact you can get anything they have there from Amazon for less. (And free shipping!)
I don’t shop best buy because they always have the sound systems up so loud I find myself getting disoriented. I’m in there for five minutes and I literally have the overwhelming urge to race to the exit.
But I am not thier target demographic.
Best Buy sold my last computer, it still has Vista on it. That for me was an unforgivable sin.
I know a fellow who bought a 500 dollar e-Machine computer. It was crippled out of the box. It was running Vista with 512 MB RAM. It was brought to me as a last ditch attempt to get it to work. I reset it to factory settings, patched it, and put in another 1 GB of RAM, for a total of 1.5 GB RAM, for free. I looked at the Task Manager to see how everything was running after the entire upgrade.
It had stabilized using around 800 MB RAM. Un-f-cking-believable.
The fellow who bought it is a hard working, blue collar fellow who doesn’t know jack about computers. His mistake was to trust a couple of large American corporations not to sell him a money pit of crap.
While I get the distinct impression that a sizable chunk of plaintiff lawyers are amoral bloodsuckers, they can perhaps serve a useful purpose, like fly maggots breaking down faeces and carcasses. In this case, a class action would be most appropriate IMO.
From the money.cnn.com article:
“Best Buy’s dismal performance was in spite of an overall nationwide rise in retail sales”
Now this is funny. Their sales were essentially flat, and that is considered “dismal”. But when Joe 6 Pack doesn’t get a raise, that is a sign of a vibrant, competitive economy and no one labels his lack of a raise as “dismal”.
WILMINGTON, Delaware — Grocery store chain A&P, which filed for bankruptcy on Sunday, may have to shutter a quarter or more of its stores if it hopes to survive, analysts say.
In bankruptcy, the company officially known as The Great Atlantic and Pacific Tea Co will get a chance to perform radical surgery on itself as it faces growing pressure in the low-margin supermarket business.
The company received interim approval from a bankruptcy judge on Monday for an US$800 million bankruptcy loan, which analysts said could give it 18 months for an overhaul.
“It’s a tough workout,” said Joe Stauff, who analyzes distressed companies for Susquehanna International Group.
Stauff said the company could close more than 100 of its 395 stores, which operate under the names of A&P, Waldbaum’s, SuperFresh, Pathmark, Food Basics and The Food Emporium in the northeastern United States.
So much for “…people still gotta eat……”
Fed to review its $600 billion bond-buying program and discuss impact of tax-cut deal
WASHINGTON (AP) — After launching a much-criticized $600 billion bond-buying program last month to bolster the economy, the Federal Reserve is now taking stock of how it’s working.
Fed Chairman Ben Bernanke and his colleagues gathered Tuesday morning for their last scheduled meeting of 2010, and no policy changes are expected.
Instead, Fed policymakers will examine the effectiveness of the unfolding program and discuss the implications of a tax-cut plan emerging from Congress.
Since the Fed announced its second round of stimulus on Nov. 3, stocks have risen. That’s encouraging for the economy because larger stock portfolios make people, especially the wealthy, more inclined to spend.
On the other hand, rates on mortgages have risen, defying one of the Fed’s stated goals of the bond-buying program. The average rate on a 30-year fixed mortgage has climbed to 4.61 percent. It’s up sharply from 4.17 a month ago, the lowest rate in some 40 years of record keeping.
The Fed’s decision to buy $600 billion worth of government bonds by the end of June is intended to spur Americans to spend more, which would invigorate the economy.
> As Mr. Holbrooke was sedated for surgery, family members said, his final words were to his Pakistani surgeon: ‘You’ve got to stop this war in Afghanistan’…
Did the surgeon look like Obama?
Hey it cudda been Osama! Just saying. No one has seen him since 9/11. And we know our govt would sell out Uncle Sam’s mother. And if we ever go muslim we could dare call him Usama. Osama, Obama, Usama.
That’s heavy.
Corpses often are. Especially American ones.
False Attorney Signatures Cast New Doubts on Foreclosures
http://www.propublica.org/blog/item/false-attorney-signatures-cast-new-doubts-on-foreclosures
I know we’re all shocked…
from the article:
“But three recent court cases point to another type of flaw in foreclosure filings that could place thousands more cases in doubt: false attorney signatures on court documents.
Experts said that foreclosures that relied on court documents with the signatures of attorneys who in fact neither signed nor reviewed them are vulnerable to being thrown out in the 23 states in which foreclosures must be approved by a judge. ”
So I guess in the other 27 states, fraud is OK?
The Christmas season will officially end at Rudolph’s Christmas Shop on New Year’s Eve.
That’s right, it will end forever. It’s been Christmas year-round at Rudolph’s for the last 37 years. The Christmas décor business in a converted barn on Highland Road is closing its doors.
“I kind of feel like I’m a dinosaur,” remarked Rudolph’s owner Don Fuson, citing a familiar refrain often lamented by small business owners being squeezed out by the likes of Wal-Mart, Target and other big box retailers with lower prices, lavish marketing plans and other techniques to lure customers.
Fuson, 63, recalled a recent customer who plainly told him she shopped at Rudolph’s only after first scouring the aisles at Wal-Mart because she couldn’t afford Rudolph’s prices. Fuson dismissed her parsimony as not entirely believable.
“And then she climbed right into her $60,000 Lexus,” he said.
This trend, combined with the drop-off in business from outlying cities such as New Orleans and Houma, Fuson concluded the business was no longer viable.
Bad local businesses are destroyed by big boxes. So so ones cling on for a few years, then give up the ghost. Good ones are marginalized and never again prosperous. Only great local businesses seem to be able to hold their own against big boxes.
Tony Of Arabia Earns $43M As Advisor To Kuwait, While Getting Paid By Morgan Stanley And The UN
Life is a party for Tony Blair, who left the UK at the top and has gone on to make an absolute fortune as a consultant.
Last night it was claimed by Kuwaiti sources that the former PM was paid $42.5 million this year for advising the government, according to Daily Mail. His firm Tony Blair Associates prepared a report called “Kuwait 2035″ earlier this year.
Blair spokespeople deny being paid that much.
Now lets run over a few other consulting gigs nabbed by Tony Blair. First, he earned $640,000 last year as the UN peace envoy to the Middle East, paid primarily by British tax payers.
Second he was hired in 2008 as a consultant to Morgan Stanley, worth $3.2 million a year. Third he earned $800,000 a year as a consultant to Zurich, a Swiss company, according to The Times Of London.
Then there’s speaking fees, worth as much as $500,000 an outing.
Sure sounds a bit like payola to me. I bet the dance of negotiating this while in office for actions taken without anything being provable would be quite interesting to watch as a fly on the wall.
His firm Tony Blair Associates prepared a report called “Kuwait 2035″ earlier this year
Hey let’s compare his 25 year forecasts with these guys ideas printed on recycled nitrate paper: Hezbollah: “Israel 2035″
* DECEMBER 13, 2010, 3:45 P.M. ET
DOJ Files Suit Vs 14 Defendants Over Alleged NYC Mortgage Fraud
DOW JONES NEWSWIRES
The U.S. attorney in Manhattan and the U.S. Department of Housing and Urban Development filed a civil fraud lawsuit against 14 defendants alleged to have engaged in a conspiracy to commit mortgage fraud in New York City.
The suit alleges the defendants, which include sellers, lenders and appraisers, conspired to commit mortgage fraud in connection with the sale of 17 residential properties in New York City.
Specifically, it says the sellers purchased the homes and quickly re-sold, or “flipped,” them to inexperienced, low-income buyers at falsely inflated prices. The appraisers in question allegedly overstated the value of the homes in their reports so that the buyers would take out home mortgage loans in excess of the property’s value.
And mortgage lenders then allegedly underwrote mortgages for the buyers knowing the properties weren’t accurately appraised and the buyers couldn’t afford payment.
All 17 loans were insured by the housing and urban development department and defaulted. The complaint seeks millions of dollars in civil penalties.
So know we know what the government thinks……we wouldn’t have had to bail out the banks, if not for the little shysters.
Where’s Dodd, Barney, Maxine, Raines, and Johnson’s names in the suit ??
Question on my mind of late: is this downturn effectively over—or at least the worst part?
Before you jump down my throat, let me elaborate a bit. I’ve been a bubble believer for many years (refused to buy after a move in 2003 because things looked unsustainably heated), a long-time reader & poster here, and I’ve long argued that the degree of pain would be equal to the degree of the mania, which was pretty huge.
Lately, I’ve been second-guessing that position. Has the Fed really pulled off a short-circuit in the recovery process with the torrent of liquidity? Retail sales data just out shows that we are only 0.3% below the pre-recession peak. That was the time at which TONS of HELOC money and cash-out financing was flowing, and many many more people had jobs. How can people possibly be spending as much now?? I really don’t get it.
I still don’t expect a rapid improvement in RE; people need both jobs, affordability, and good credit history to borrow, and only when those three things return will RE truly recover. And supply and demand will not be denied, meaning that the shadow inventory will drag on the market for years.
But frankly, I’m beginning to doubt myself and my conclusion that the economic pain (and stock market pain) would continue to be significant for some time. I thought that the effect of kicking the can down the road would be a much more drawn out recovery. Now granted, I know that jobs are nowhere near in recovery, and likely won’t be for years. But I suspect that the period of mass job-losses is behind us, and we are at the point where a slow return to employment is in front of us. Improvement there, even a slow one, will boost people’s confidence.
Help me out, people; I’m losing my faith in the downturn.
‘Before you jump down my throat’
When I read these type of posts, I stop at statements like that. I for one don’t want things to be worse economically. Here’s a news flash; the people that post here don’t have some monolithic view. About the only thing that most agree on is that house prices should be lower.
Let’s look at the double speak we see in the media, vs what I might say; media - housing prices lower, economy bad. Me; lower house prices are good for consumers and the economy.
Media/govt; the economy can only recover if housing prices increase. Me; the economy will only begin to recover when housing prices revert to affordability.
OK, so in some areas prices are getting near where they should be. In some places we are not even close. We used to debate here long ago about which parts of the country would recover soonest. I always leaned toward the position that it would be those where house prices fell the quickest. Lots of posters disagreed and had valid reasons. But anyway, let’s not fall into the bizarro semantics that the MSM and the govt uses to discuss this stuff, please.
Watchout Ben! Telling the truth can get you put on Homeland Security’s Naughty List.
“When I read these type of posts, I stop at statements like that.”
Sorry, Ben, if that statement struck you the wrong way. I have seen a couple of people attacked on the blog for being more optimistic than the majority, so I was just trying to ask readers to reserve judgement, in the hope that I would not experience the same.
I still would appreciate your comments on the remainder of the post; I really value your opinion and experience learned from the TX bust (which I experienced to a lesser extent and with lesser awareness in LA, btw).
I totally agree that the MSM does not get it, and frequently is 180-degrees wrong on their interpretation of data. Lower prices IS the way to clear the market and see it return to normal function, and thus is necessary for recovery. And I agree that the areas that fell the fastest will likely recover soonest. But I also think that given time, the economy may change structurally to a sufficient degree that we see economic recovery prior to housing recovery (unlike historical patterns that I believe you are expecting to repeat). In such a scenario, housing wouldn’t be as large a driver as in other recoveries, but growth in other sectors could occur.
It may sound awful, but I was almost _was_ rooting for the downturn, out of a (perhaps mistaken) believe that it was a necessary process of adjustment—essentially excising the cancerous mis-allocations of the debt-fueled boom.
Maybe I am just going through a period of questioning my assumptions, or maybe I really was wrong about a lot of things. Time will tell, I suppose, but I was hoping to hear other folks thoughts in response to factor into my thinking.
Thoughts welcomed…
I was beginning to think humble people were extinct. Nice post.
Thanks, pressboard!
Prime_Is_Contained,
FWIW ( ‘I’ get it )
Here’s an example; those that have been on Unemployment ( a number cited as -prior- to the earliest cracks in the seams, Credit Crunch May 2007 ) are very MUCH invested in a continued downward spiral!
Bad news is Good news where they’re concerned and they can’t get enough of it. My take going forward is that there will essentially be (4) Economies.
Two for Bulls & Bears ( non-connected ) and Two for Bulls & Bears ( connected! ) Connected Bulls will do best and Non-connected Bears will fare the worst.
“Bad news is Good news where they’re concerned”.
True, D. And the stock market has been reacting the same way for some time: bad news means improved chances of stimulus and money-printing, so the market goes up and up.
“there will essentially be (4) Economies. Two for Bulls & Bears ( non-connected ) and Two for Bulls & Bears ( connected! ) Connected Bulls will do best and Non-connected Bears will fare the worst.”
I didn’t quite get that part, D. Care to elaborate?
Or are you saying that insiders will win on the upside and the downside of the market, and the little guys will get screwed? Isn’t that “business as usual” in the markets?
“Thoughts welcomed…”
Okay…I’m EZ…I don’t know what the Masters of the Universe and the Gods of “k” street want of me.
I’m just avoid the Temples and try NOT to become a little burnt offerings.
OUCH!!
Crispy Critter mikey…out.
Next…
We are in the eye of the storm created by massive government deficits.
Our net import economy is fueled by debt. Money is debt. Money flows out of the country in the form of massive trade deficts. We have to constantly borrow that money back via more debt.
Unfirtunatly, after 40 years of business and household debt rising at 3x the sustainable rate, they can’t be the borrowers.
The government has stepped up with $1.5T a year deficits to keep the money flowing. Unfortunately, that can’t last for long. The threat of 2 more years of massive deficits already has interest rates rising. Those rising interest rates will feed back into larger deficits, more borrowing, higher interest rates, etc.
Eventually, the government will be forced to cut back spending, and when they do, unemployment will take another major leap higher. Combined with higher interest rates, we’ll be back in full collapse mode.
The real, underlying problem with the global economy is global wage and lifestyle inequity. The developed world is going to have to take a massive hit to its standard of living, and the developing world is going to have to push higher wages and more consumption by its people to stop them from flooding the world with cheap goods that no one can continue to buy on credit that can’t be paid back.
We’re using delay and pray economics in hopes of not having to deal with reality, but reality is refusing to go away.
As I would say when house prices were going up, it can’t get better until it stops getting worse. Well, the debt problem can’t start getting better until it stops getting worse. Trade debt can’t start getting better until it stops getting worse.
Well, house prices did stop going up and started going down. Total debt has not stopped going up because of government efforts….but that is temporary. We haven’t had to take the real hit to standard of living because the government is still able to collect $2.2T and spend $3.5T. So, we’re able to keep buying cheap goods made in China, call tech support in India and offshore our tech jobs to both of those countries…..
But it is temporary!
Thanks much for the thoughts, darrell. I agree that these large scale global imbalances are clearly unsustainable, just as the housing price growth above income growth or rent growth was fundamentally unsustainable. I just don’t have a good sense of how long it will be before the rest of the world comes to that conclusion, and the day of reckoning is at hand. Nor do I have a good sense of what that day will look like.
“large scale global imbalances are clearly unsustainable”
Agreed. So much so, they basically don’t matter any more? Even though, yes I get it, the S & L Scandal paled in comparison..! It eventually became a political problem ( and no longer an economic one )
This will too. We’ll keep plate spinning exercises until they’ve effectively dampened the oscillations and come up w/ new & exciting deriv’s until they’ve swept the the entire issue under the carpet.
Perma-bears will be like Imperial Japanese soldiers still awaiting orders from the Emperor hiding in the jungles of far flung Pacific outposts.
As Darrell says, we are in the “eye” of the storm so it feels like calm up here. IMO it’s nowhere near to end. The collapse may not be sudden like 2008 it’s a slow grinding death.
I’m still looking for some kind of stagflation until we can get out of this debt hole, and there has been plenty of can-kicking done. And public services are going to be devastated. But it is possible that things won’t get any worse from here overall, with losses in some cases balancing improvement elsewhere.
Stocks are over-priced based on low dividends, unless you assume massive inflation that stock prices will keep up with. Bonds look bad either way.
Agreed, stagflation. I’ve been waiting for the property values in our area to fall which should lead to lower property taxes. Then again, what the hell was I thinking?
Year Tax assessment Taxes paid
2010 $305,500 $3,422
2009 $333,500 $3,365
2008 $350,900 $3,312
2007 $321,000 $3,104
2006 $315,800 $3,076
“I’ve been waiting for the property values in our area to fall which should lead to lower property taxes.”
This is a common misconception, but in most areas a lower property valuation does not really lead to lower property taxes—it simply leads to a higher mill-rate. They simply divide the amount of taxes budgeted by the sum of all property values to get a mill-rate, and then multiple this mill-rate by your property valuation to get you share. So your taxes really only change if your valuation goes down more than others. If they all go down proportionally, your share of the total taxes remains the same.
In some area, there are laws that prevent the millage rate from being changed more than a certain percentage in a year, so the above would not apply. Those areas are the ones most likely to have crushing budgetary issues in the bust.
In many localities the mill rate is fixed.
How much are the taxes on house in Detroit bought for one dollar? How high can the mill rate be?
WT, the stagflation argument makes some sense to me. If you assume that the Fed remains resolute in their goal of producing some inflation, and that the economy is going to remain in a low-growth phase due to continued debt-reduction, that certainly sounds like potential stagflation to me.
The question in my mind, though, is how high that inflation rate will have to be before the Fed stop pumping. 2.5%? 3%? 5? 8?
I suspect that how stagflation feels to the nation will vary dramatically with the answer to that question, and it is unfortunately unknowable.
Unemployment benefits have run out for millions. Houses are still too darn expensive in most of the country.
We are just at the beginning.
“Unemployment benefits have run out for millions.”
Thanks for that reminder, Steve; that could well be the thing that tips the scales over the next year. People with no income and no remaining credit really cannot spend.
“Houses are still too darn expensive in most of the country.”
I totally agree. They are still a factor or 1.5-to-2 times overpriced in my area, IMO.
“Unemployment benefits have run out for millions.”
And they have plenty of time to get angrier.
Prime,
Here is one of my frames of reference. In 2001 I rented a 1BR apt in a 4-plex for $700/mo. Down the street was a house for sale in a fairly desirable part of Portland for $220k-ish. At the time, I felt it was a little pricey, especially given the 9% APR kicking around at that time (and my lower income at the time). It sold for $240k, then sold again in 2004 for $340k, then again in 2006 for, cough, $595k! I’d say it’s valuation is down to about $550k now.
So, I’m still “rooting” for more pain. And I don’t apologize for it. Now, I don’t want to see people on the street or riots or any of that.
But I think of it this way. When that house sold for $240k, there weren’t many people on the street or riots then either. Why are we so afraid of affordable housing? In 5 years, it tripled. It’s been 4 since, and it’s still wildly unaffordable. Of course, since we over shot steady state so much on the way up, maybe (given all the interventions) things need to get downright ugly to overshoot steady state on the way down to get that house back to $240k.
Why are we so afraid of affordable housing?
IMHO, this should be put on an HBB tee shirt. (Paging Ben!)
I don’t want a bunch of grungy broke people living at the beach. Students are bad enough.They don’t pay their way. Send them to Trona
Hey there! I LOVE Trona. I don’t want it messed up with grundgy people either. The Pinnacles on the bottom of defunct Searles Lake are the one attraction to which I take all visitors from outside Calif.
As I think about this more and the differences between 2001 and 2010, two things would get us there fast - 8% FRMs and removing the level of federal backing of mortgages. (Given that the other difference, lending standards, have supposedly come back to equilibrium somewhat) In the absence of those, since the PTB don’t want that to happen, the ONLY way to get there is pain for everyone else.
Good reminders, sleepless—thanks!
I totally agree that the PNW is nowhere near back to equilibrium… And as such I’m very glad that I’m still renting!
I’m just baffled how some of the economic data appears to be improving while we so clearly should still have more pain in store.
‘Why are we so afraid of affordable housing?’
The most active interest groups are invested in either the RE bubble or the housing subsidy narrative. Deflated prices screw both of them.
Interesting proposition — just a little while ago, I posted (far above) that the “real” hard-money lending rate for good income, poor credit, good down-payment is … 7.8% right now.
“So, I’m still “rooting” for more pain”
You shouldn’t have to even think about apologizing for the realization that things got SO far out of whack and are not nearly back to a sensible reality.
It just takes a very long time for some to admit their tulip bulbs weren’t a good investment that “never goes down”.
Once you do you realize you were suckered, and not just a victim, it’s even harder for people to admit that they aren’t as smart/clever/talented at they thought they were.
Embarrassing as well as financially devastating.
And the collateral damage won’t be pretty, but like taking off a bandage, sometimes quicker is better.
Prime and whyoung,
Ben says above he doesn’t want the economy to get worse. He’s in a different environment than we are, so I assume he’s coming from the perspective of much lower prices and seeing the effects to date up close in personal in his job. We don’t have that yet here. Maybe the “more pain” I’m hoping for is just the pain they’ve been through but would make things even worse there.
I just wish we’d realize that prices and the economy from 2000-01 (and I’d go back to 1995 to appease others here) were the sweet spot. My mid-30s friends in Seattle with $600k mortgages don’t seem to agree.
Frankly, I don’t know how that has eluded us as well as it has (yes, there are SOME declines)…and that pisses me off.
RE will fall another 15%, to inflation adjusted average. But I’m also starting to think that we’ll avoid another Great Depression.
“How do I defraud thee? Let me count the ways.”
Now we have robo-signer non-attorneys to complement the robo-signing document-processing fraudsters.
All is Fraud
Next Big Thing In Mortgage Fraud: Fake Attorney Signatures
By Ben Popken on December 14, 2010 10:00 AM
The next big wave in disgusting mortgage fraud revelations could be faked signatures from foreclosure attorneys. And homeowners fighting foreclosure are using it to hold onto their house.
These are foreclosures that used court documents sporting signatures from attorneys who did not themselves sign them or even look at them.
An attorney’s signature is supposed to represent that they have personally reviewed the documents and verified their accuracy.
What is getting uncovered in several cases is that there were foreclosure firms that had only a small number of attorneys, and a large back room filled with non-attorneys filing documents at a breakneck speed.
…
U.S. role in housing market, say economists, makes it harder to predict end of crisis
By Alan J. Heavens
Inquirer Real Estate Writer
The housing downturn that began in 2005, 2006, or 2007, depending on location, has tested the mettle of the economists whose job it is to figure out when and how the crisis will end.
Some economists argue, and with considerable justification, that government interference in the real estate market has made predicting the date of recovery from difficult to impossible.
“We misjudged the impact of the two tax credits,” said economist Patrick Newport of IHS Global Insight Inc. “We expected the credits to both shift demand and increase sales and starts. It appears that the tax credits mostly shifted activity.”
The level of interference is now much lower, and a clearer picture of the market is emerging, allowing economists, as well as civilians, the opportunity to predict with a bit more accuracy.
The “when” remains difficult to pin down, although the nonprofessionals - typical homeowners and renters - believe they have the answer.
Recovery will occur anywhere from 2012 to 2015 and even later, according to most of the 2,000 homeowners and renters surveyed by Harris Interactive in November.
Recovery will occur when wages rise to make houses affordable at previous levels. If the Fed is successful at maintaining a nice stable 2% inflation, and wages magically manage to keep up, then house prices should return to their peak by about 2050.
“Recovery will occur when wages rise to make houses affordable at previous levels.
I am not as smart as you darrell, but my thinking is that recovery will occur when prices drop to make houses affordable at current wage levels which seems to be happening even given the best efforts of government and banks.
“Recovery will occur when wages rise to make houses affordable at previous levels.”
Over the long run, I’m sure that will happen.
Oh but wait, I think you forgot another possibility, Darrell: Home prices could also fall to levels that would be affordable at current or near-term future wage levels. It’s happened in every previous U.S. housing bust; are you suggesting it’s different this time?
Redistribution of wealth????
Back in the 1980s, the Republican party embraced the Laffer Curve….
At 0% tax rate, the government generates $0 tax. At 100% tax rate, there is no economy, so the government generates $0 tax. Therefore, there is some curve blah, blah,blah… the myth that tax rates were too high and were crushing the economy and that lower taxes would grow the economy so fast that total tax receipts increase……
The actual result was the rich used their new lower interest rates to create a series of bubbles, each larger than the previous, each generating mass profits for an elite few, each very destructive when they popped, and costing the poor unwashed masses all their gains and then some. Junk bonds, commercial real estate that took out the S&Ls, tech bubble/wreck, consumer debt housing bubble, etc. etc. etc.
What the Laffer Curve ignores is the need to keep money moving.
Consider this: If there is no money, no economy. If all the money is in the hands of a select few individuals, no economy.
A healthy economy requires money keep moving. Sure, wages would be a GREAT way to move money from rich to poor… but with 7x as many people in Chindia as the USA, and those people willing to work for $1 a day instead of $10+ an hour… Clearly wages aren’t working as a means of moving the money back down.
For 40 years we’ve access to debt to keep money moving. Ever lower interest rates and ever looser lending standards kept money flowing from rich to poor in the form of loans. Of course, the rich actaully expected to get paid back, and when it became clear they weren’t going to get paid back, the government stepped up and made sure the rich didn’t get poor.
The problem is, the poor can’t continue to borrow and the rich won’t continue to lend to people that can’t pay it back. SO, that mechanism of keeping money moving isn’t going to work.
So, now what?
We could let all the money continue to move into the hands of the few, let them inflate new bubbles, and see the middle class continue to disappear.
Does money exist to allow al elite few play with peoples lives as if they are playing a game of Monopoly? If so, then let’s just look away as fewer and fewer people control more and more of the wealth.
OR, does money exist to allow the economy to function? If so, then we need to keep it moving.
It isn’t redistribution. We’re not taking ALL of the property of the rich and perminantly giving it to the poor. We’re just keeping the money moving. It is going to be right back in the hands of the rich, to be taxed away again, put back into the economy, and then find its way back into the hands of the rich.
I guess there are other options…. We could add massive trade tarrifs, jack up the minimum wage, force the money back down via wages so that we don’t need to use tax to keep the money moving. Yeah, as if.
Did you write this piece, Darrell? It is excellent.
We will get to trade tariffs. It’s just a matter of time. Kruegman had a bit on this. What will china do, well they will sell the dollar this will of course make our exports even cheaper.
I’m not so sure that it’s basically an economic issue, Darrell, as much as a question of ethics and morality.
I’m quite serious in my comment, and it’s meant in the largest, macro-level sense possible.
Bloomberg ‘A U.S. Treasury program aimed at preventing 3 million foreclosures is likely to fulfill less than a third of its goal, a congressional watchdog reported. …Homeowners are dropping out of the program at a faster rate than they’re joining it, the Treasury reported last month. The number of borrowers aided by HAMP grew to nearly 520,000 in October, up 23,750 from a month earlier, while 36,300 dropped out after failing to make their modified payments.’
‘The Treasury will spend only about a fourth of the $50 billion it allocated for the program in 2009, according to the Congressional Budget Office. “For this reason, Treasury’s reluctance to acknowledge HAMP’s shortcomings has had real consequences,” the TARP panel found. “Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help.”
Sounds to me like this is the kind of “help” they don’t want. And even among those that want “help” to continue overpaying for a house, the majority figure it out and stop sending in checks.
mortgage mod is a great way to live in the house another 6-9 months, rent free.
My SIL who has lost 2 houses to foreclosure was preparing to go on a cruise. I asked how they can afford a cruise. Her answer was that it is amazing how much money you can save when you are living rent free for over a year.
Her answer was that it is amazing how much money you can save when you are living rent free for over a year.
And there’s been some talk in the MSM about this very thing. Earlier this year, I read a Business Week article that suggested that increases in consumer spending were related to non-payment of mortgages.
Meanwhile, we pay our rents/mortgages, don’t go on cruises, and are still faced with expensive houses.
And by the time those houses approach affordability, she (with repaired credit) will be right there competing with us again.
/grumble
“Her answer was that it is amazing how much money you can save when you are living rent free for over a year.”
What she left unsaid was that those living rent-free also have an active incentive to spend all of their savings on things like cruises.
If you live in recourse state, or have a 2nd mortgage that is recourse, there is always the threat of the lender coming after you. If you spend every penny on consumables and thus have no attachable assets, then they have no incentive to come after you—and even if they do, BK is straightforward protection.
“Homeowners are dropping out of the program at a faster rate than they’re joining it, the Treasury reported last month.”
That would tend to HAMPer the program’s effectiveness, wouldn’t it?
‘And even among those that want “help” to continue overpaying for a house, the majority figure it out and stop sending in checks.’
Who’d've thunk so many FB’s would have seen through the Treasury’s propaganda?
Who’d’ve thunk so many FB’s would have seen through the Treasury’s propaganda?
And *no one* saw this coming!
Ben Jones wrote:
“Media/govt; the economy can only recover if housing prices increase. Me; the economy will only begin to recover when housing prices revert to affordability.”
Ben, Chindians will work for $1 a day where USA wages are $10+ an hour. Engineers in Chindia make $3 a day but in the USA they make $30+ an hour.
Businesses can’t compete without offshoring as much labor as possible. Therefore, we have a massive leak in our economy.
The only way we can continue to be a net import economy is to constantly borrow back the trade deficit. This means all Americans must have access to ever more debt at ever lower rates issued with ever looser lending standards.
Housing equity has been the collateral that the debt has been based on.
Without continously rising housing prices, how can we possibly continue to grow debt at 3x the sustainable rate?
Without debt constantly rising at 3x the sustainable rate how can we continue to run massive trade deficits?
Without massive trade deficits, how do we maintain a standard of living so much higher than the people in Chindia that do all the work needed to provide us with that standard of living?
How does the economy get better when we’re finally forced to face the reality that without constantly rising debt, our standard of living is totally unsustainable in the face of global wage preassure? We lower wages to be competative with Chindia and crush our standard of living? We print money out of thin air until we deflate the dollar and have enough years of high inflation and flat wages to inflate away our standard of living?
What you seem to fail to grasp is the economy is based on debt, and that debt is based on ever rising housing prices. Without ever rising housing prices, we have no source of new debt that our economy needs to function in the current global reality.
The housing bubble wasn’t the problem. It was a mechanism… a bandaid… which allowed us to ignore the real problem for a little while longer.
How would you deal with the real problem of low global wages and massive trade deificts so our economy truely can get better?
‘What you seem to fail to grasp’
Yeah, whatever…
So, you don’t think that trade deficits are the source of our troubles, and that debt wasn’t the means of dealing with those trade deficits, and that the housing bubbles wasn’t a tool to keep debt rising?
Or was the “yeah right” directed at the comment about you seeming to not realize that the trade deficits are the real problem.
Darrell I don’t know you but I do know of Dick Cheney and he said, “Deficits don’t matter.” I dunno but I think he has access to better macro and micro economic news than you do. :>)
And geez, why would a politician make a public statement with anything but a purely honest motive?
That’s what I was thinking too.
What I see is too much govt regulation here in CA.Seems like the state agencies here are more interested in creating jobs for themselves and getting huge pay raises.Instead of providing a healthy business climate they are jumping on every reason to create more regulation.Mainly via environmental regulation now.I think I read somewhere that CA has about 600 boards.
The cost of building permits is outrageuos.It can cost 100k before you put up a 2*4 in s. CA.The local govts have become way too powerful.You cannot do anything here without paying some extorsion fee.I think this is really hurting the economy.
Absolutely. And the “tax the rich” scheme that operates at the state level in California has resulted in…the rich moving to Texas and Florida.
There is very little wealth in California, it’s true.
“Without ever rising housing prices, we have no source of new debt that our economy needs to function in the current global reality.”
Well we’re frackin’ doomed, then, because the housing bubble has decisively popped, and despite the best hair-of-the-dog stimulus effort by the Fed and others, bubble-era home prices are not coming back any time soon.
I agree. We are doomed. The massive government deficits are keeping us alive for a couple more years… But there are limits.
I was being facetious, but if you want to wallow in doomsday predictions, enjoy…
“Well we’re frackin’ doomed”
And the Cylons haven’t even attacked us yet.
Ben, Chindians will work for $1 a day where USA wages are $10+ an hour. Engineers in Chindia make $3 a day but in the USA they make $30+ an hour.
You can hire Haitians at 50 cents a day. Why is there not a massive movement of American jobs there? Or in the last 50 years?
There is more to attracting jobs than just low wages.
Skilled workers. Hard workers. Corruption. Good roads. Good communications. Cheap and abundant energy. Cheap and abundant water. Low taxes. Sane regulations. etc.
Germany has some of the highest wages in the world yet they are a massive exporter.
Why?
Germany has some of the highest wages in the world yet they are a massive exporter. Why?
Two words: German engineering.
Because they have the world conned into thinking that “Superior German Engineering” is worth paying a 50% premium for.
Its not just Beamers, Audis and Benzes. The Germans make and sell all sorts of stuff and unlike us with our “git ‘er done” attitude they actually do focus on quality.
My FIL is German and my wife told me that when they moved to the US the first thing he did was realign the kitchen cabinet doors in the house because the were crooked. He even made a tool to perform this endeavor (he is an engineer).
In Germany, even the trees in parks are squared up.
I once stood in the rain waiting to cross the street until the light changed. Not a car in sight and not a single German crossed until the light changed. This was in Dusseldorf, not exactly a small town.
Government healthcare and strict cost controls, along with focused trade tarrifs…. Not to mention having by far the best natural resources of Euro Zone and a nice position on East/West trade routes.
Then there is the whole, USA paying the bulk of their national defense costs.
Well, it would seem that in Germany, while in school they teach you how to make things.
In USSA, the teach you how to use a condom, take multiple choice tests, and how to sign up for welfare. Not necessarily in that order.
FWIW, none of my kids were/are taught any of those things at their schools.
Yes, there are brain dead kids in the school system who will do the minimum to graduate. But in my personal experience there are also plenty of kids who sign up for AP and IB program classes.
FWIW, none of my kids were/are taught any of those things at their schools.
———————————————————————-
How do you know they weren’t?
“Yes, there are brain dead kids in the school system who will do the minimum to graduate”
And a lot who don’t graduate at all…
___________
Regarding countries that are sources of imports, they have to have some “order” and the ability to produce things to a certain quality level.
My previous employer tired to make dress shirts in Mexico, but ended up sending all the work back to Asia over quality control issues, as repeated attempts to get it right failed.
___________
And in Germany, at an early age, you get sent into either an academic or “practical” educational track. But getting a good apprenticeship is hard these days.
Have a friend there who teaches at a school for people from the “practical” track who are going back for additional education to try and improve their qualifications… she had a student complain to the administrator when she insisted that the student actually bring her text books to class.
Have a friend there who teaches at a school for people from the “practical” track who are going back for additional education to try and improve their qualifications… she had a student complain to the administrator when she insisted that the student actually bring her text books to class.
And I have a friend who taught English in Japan during the late 1980s. He was from Phoenix, and was a public school kid all the way through his university years.
While he taught in Japan, he often saw teenaged students throw falling-down-on-the-floor-and-screaming tantrums over the fact that they had homework to do after English class. He never witnessed such behavior back at Cortez High.
Anyway, after he came back to the States, we got together and he had lots of stories to tell about the non-work ethic among Japanese youth. I’ll never forget his punchline — that we Americans could sit here in the States and watch them fall.
Also, I am amused that you compare the “USSA” (I assume that the second ‘S’ is for socialist) to Germany, being that the USA is far, far less socialist than Germany. In case you have forgotten, they’ve have “socialized healthcare” in Germany for decades.
Don’t confuse him with the facts.
Well at least Germany’s health care rates better than ours.
http://www.photius.com/rankings/healthranks.html
We are less socialist than Germany? Who’s giving away their factories and giving all the taxpayer money to the TBTF socialist banks? Free market my $ss. You all must be drinking the CNBC Kool Aid
i’m ok with socialized medicine and a strong defense.
pick one.
Because health care is taken care of by the tax payer. They pay 50% less than the US does for each person.
Because they are heavily automated and that requires education.
“Skilled workers. Hard workers. Corruption. Good roads. Good communications. Cheap and abundant energy. Cheap and abundant water. Low taxes. Sane regulations. etc.”
From what I have heard India only has the first three.
Airbus would have been pushing up daisies years ago, if not for massive subsidies from euro governments.
There is no logical/economic reason whatsoever for the Euros to continue the A400 program, with $10 billion dollars of cost overrruns and not a single airplane delivered yet, and the C-17 available.
But logic and saving money has nothing to do with it. Seems that the euros are willing to spend whatever it takes to maintain an aerospace industrial base. Same with the Russians. And the Brazilians. And the Chinese. They are willing to sell their aircraft at cost, or at a loss, because any return they get helps offset the cost of maintaining the base.
Our government, however was/is willing to throw all of us under the bus, because their priorities are fighting communism/terrorism/whatever-ism they come up with next, and “free trade”. All kinds of decisions have been made to “protect alliances” rather than protecting/supporting our manufacturing base.
Also doesn’t help that our government wants to slap trade sanctions on everyone and their brother, whenever they do something that gets the US government’s panties twisted.
I have been told by folks in Airline biz that Airbus jets are crap.
I’ve heard that, when it comes to big commercial passenger transport planes, Boeing is it. No other company comes close.
Workers at call centers in the Philippines that speak very good English get $2.25 an hr.
“How would you deal with the real problem of low global wages and massive trade deificts so our economy truely can get better?”
Maybe if everyone went out an bought a brand-new SUV?
“Engineers in Chindia make $3 a day but in the USA they make $30+ an hour.”
False, darrell. I have it on very good authority (Indian managers of US tech companies who were responsible for projects that got off-shored, and then were on-shored again for quality reasons) that the data at least for India is FAR FAR from what you describe.
It used to be approximately a factor of six difference between US and Indian software developer wages. With the boom in this space in India, and the tech bust wage stagnation in the US, the wage gap shrunk to approximately a factor of three.
It can’t go much further before it is roughly cost-competitive. For example, with a 50% devaluation of the dollar, or another doubling of their wages (or some of both), we are basically there. At that point, the drain should essentially stop.
I have no such information on China, and the wage gap may be much higher there. If so, it is at least in part due to the yuan being pegged to the dollar, as this skews all China production costs.
There is also not a one to one replacement rate(as my previous company discovered). It seems only Americans are willing to be on call 24×7 and work 60+ hours a week for no extra pay.
“It seems only Americans are willing to be on call 24×7 and work 60+ hours a week for no extra pay.”
Also known as Self Employment.
Total cost of employment is not the same as worker wages. Facilities, energy, transprotation, communication, bribes, etc. all bring the cost of labor closer.
I was speaking specifically to the worker’s wages. And yes, I was more focused on China, where my company is currently off-shoring software development.
They can hire 5 people there for every 1 here, but that includes a lot more than the actual labor… which is about $3 a day for the programmers.
Besides, if we take that 50% devaluation of the dollar (increase in comoddity prices) on flat wages, that will be a pretty significant hit to our standard of living that we’d need to return to being price competative.
Great point on the difference between total cost vs wages. I was not thinking about the totaly cost difference. I could see RE/facilities/etc all being dramatically cheaper as well, particularly in China.
Your data for China is better than mine, which is essentially nil. Hiring 5 for 1 is still a dramatic advantage, as long as those 5 are good.
Totally agree that a 50% hit to our standard of living will be significant and painful. And if it ends up being devaluation (e.g. commodities prices double) that shifts us toward equilibrium (as opposed to their wages doubling or quadrupling), we will have to use less of everything we import, or make corresponding cuts elsewhere.
My $19k house deal is back on! The people handling the entire sale are in India! 100% outsourced paperwork and all correspondence. I will give more details soon - don’t want to jinx it!
I’ve bought Indian software. It was sh*t. Had to completely re-do it.
Lower price housing would make the American worker more competitive. Proping up house prices is an attack on the American worker.
But letting the house prices fall would crush the American banker as even more people walk from their debt.
The price difference isn’t that big. I think factory workers in Guangdong Province in China make about $2/hr these days. Their effective wages are even higher when you take into consideration purchasing power parity.
A devaluation of the dollar would help a lot. Currency manipulation by other countries, however, makes this quite difficult.
A donation has been made in everyone’s name to The Human Fund.
Happy Festivus.
I still haven’t got my pole up, but I’ve been airing my grievenses since last festivus.
“…..got my pole up…..”
must………..resist………..
Jeff - I guess your going to have to prove that Fetsivus exists!!
Now I lost my train of thought!!
Another Festivus miracle!
O.J. Simpson in jail, but still gets tax break
By ANDRES VIGLUCCI
The Miami Herald
Posted: 8:37 a.m. Monday, Dec. 13, 2010
O.J. Simpson may not be coming back to South Florida for a good long while, but he’s still entitled to a homestead exemption on his Kendall home.
So ruled the Miami-Dade County property appraiser’s office after a neighbor complained that the convicted armed robber and long-ago football and TV star’s current extended residency at a Nevada prison should preclude him from receiving the property-tax break usually afforded to Florida homeowners.
i think i ready for the feats of strength.
Ahead of the Fed: Hoenig Remains Lone Dissenter- NYTimes
As the lone dissenter on the Federal Reserve committee that sets interest rates, Mr. Hoenig, the president of the Federal Reserve Bank of Kansas City, has been a persistent skeptic of just about everything the Fed’s chairman, Ben S. Bernanke, has done to try to stimulate the flagging recovery.
My favorite quote from this article:
As for his future, Mr. Hoenig is certain that he will not follow other Fed veterans who have gone to work on Wall Street. “I can tell you one thing,” he said. “I’ll never work for a too-big-to-fail bank.”
New Video Game idea:
You get to select from an assortment of weapons (baseball bat, taser, hammer, chain-saw, weed-wacker) as you make your way into the grand ballroom of the Goldman-Sachs Bonus/Christmas party.
The Daily Show:
“Charles and Camilla Commemorative Riot Plates”
Airline Profits to Drop 40% on Taxes, Oil, Group Says
Global Airlines 2011 Profit to Drop 40% on Tax, Oil, IATA
A recovery in demand for air traffic after the deepest economic downturn since World War II has been uneven, with European carriers such as Deutsche Lufthansa AG struggling to boost ticket prices.
Airlines may post a 40 percent decline in combined profits next year on slower economic growth, higher fuel costs and austerity measures in Europe, a leading industry group said today.
Net income will drop to $9.1 billion in 2011 from $15.1 billion this year, International Air Transport Association Chief Executive Officer Giovanni Bisignani told reporters in Geneva. With revenue set to grow 5.8 percent to $598 billion, the profit margin will fall by almost half to 1.5 percent, he said.
Less than 500 to go to 12,000 go DOW!
Stocks Move Higher on Stronger Economic Reports- AP
Upbeat reports on retail sales, business inventories and wholesale prices drove stocks higher Tuesday. The yield on the 10-year Treasury note rose to its highest level since May.
If it makes it to 12k, Ben should let Eddie back on the blog. Just for one day, that would probably be more than enough.
Eddie might still be proven right.
No doubt!
Where the heck is Eddie 12,000?
The Senate voted 83-15 Monday evening to advance the package, which would provide a two-year reprieve from tax increases scheduled to take effect on Jan. 1 at all income levels.
“This proves that both parties can in fact work together to grow our economy and look out for the American people,” Obama said
This proves that both parties can in fact work together to enrich the elite and increase the debt for the American people. We can throw trinkets at the poor and blind the middle class to get the job done.
I’d like to see what happens if/when DADT gets tossed into this bill. Now, that will be interesting.
It certainly proves that the working class can go suck it. And we’re not talking about the government teat, here.
Refrigerator thrown from building strikes, kills man.
A 33-year-old man who was part of a crew renovating a building on Milwaukee’s west side was killed Tuesday when he was struck by a refrigerator his co-workers threw from the building, a Milwaukee police spokeswoman said.
Initial reports indicated the refrigerator fell four stories to the ground, where the man was struck.
The incident occurred about 9:40 a.m. at 811 N. 22nd St., police spokeswoman Anne E. Schwartz said. The workers who threw the refrigerator said they yelled down to the ground but didn’t hear a response, so they thought the area was clear, she said.
The victim apparently stepped into the path of the refrigerator as it fell, Schwartz said. No one is in custody.
“It appears right now just to be a tragic accident,” Schwartz said.
The victim died at the scene. His name has not been released.
‘But officer, I yelled “watch out” before firing my gun out of the window. I figured since I didn’t hear anybody yell back, it would be okay. It was just a tragic accident.’
– Testimony from Lee Harvey Oswald’s trial.
LOL!
SILVER VIGILANTES TAKE ON JP MORGAN
Hagens Berman Sobol Shapiro LLP announced today that JP Morgan and HSBC face charges of manipulating the market for silver futures and options in violation of federal commodities and racketeering laws in a new lawsuit filed Tuesday in the U.S. District Court for the Southern District of New York.
http://marketshorter.com/index.php?option=com_content&view=article&id=38:silver-takes-on-jp-morgan&catid=11:shorts&Itemid=91
‘What’s a home worth?’
Borrowers are watching their “locked in” low rates expire — while they pay for one appraisal after another. Lenders are afraid to trust the appraisals they get, and are ordering more and more of them. The appraisers themselves say they’re being paid less to work faster in a more confusing market than they’ve ever faced.
(I haven’t had a chance to read the article)
“I was being facetious, but if you want to wallow in doomsday predictions, enjoy…”
I too was being fectious.
As the housing bubble was reaching its peak, and I was predicitng a 50% drop in PHX area prices with possibly 50 years to return peak prices, people said I was an end-of-the-world, doom-and-gloomer.
My response was that if you consider a 50% drop in house prices to be the end of the world, then yes, I’m prediciting the end of the world. I don’t consider it the end of the world.
Same goes here. If you think a significant drop in the standard of living of the average American is “doom”, then we’re doomed. I consider it the obvious end game of no longer being able to use ever rising debt loads to borrow back our trade deficits.
Thanks for the clarification!
What is money?
I’m sure that guy that had his arm pinned by a rock inside a cave must’ve asked himself that question x1000
Today, From the no comment needed section:
Illinois police probe Springfield mayor’s death
Bty the CNN Wire Staff
December 14, 2010
“…Davlin had been ordered to appear in court to account for an $845,000 estate for which he was the executor. He told a judge last week that he had hired a lawyer in the matter.”
- A medium of exchange
-
A store of value- Legal tender for repayment of debts
I think to find its true essence, we have to look at how it is created and destroyed….
Yes, you can exchange it, but that does not create it or destroy it.
I think money is borrowed into exsistance and destroyed when its not paid back
The answer varies at different times in history.
Today? Money is debt.
100yrs ago? PMs.
Originally I made shoes, the guy down the road had a cow and chickens and you made clothing. We all traded and got what we needed for what we had. Money was supposed to equal so many eggs which were supposed to equal so many shoes etc.
Todays money is esoteric and for the most part there is a lot more of it than chickens cows shoes or clothes….
FED keeps rates at 0%
Re-affirms QE2.
…
Obama/GOP put 850 billion on the credit card.
…
Mr. Market dumps treasuries.
(Watch the S&P/DOW get weaker under the weight of collapsing bond prices)
Check TLT,TBT,TMV bond EFTs
Now is the time to drive a stake into the dark heart of the FED/Wall St. - Let’s take the 5 year bonds to 7% in 90 days!
Yeah, but they just paid the Visa with the MasterCard…
My initial reaction to Blue Star’s comment was, great, if Treasuries paid 7% I wouldn’t have to spend my time making mortgage loans at 7.8%. And my NEXT reaction was that my poor-credit mortgage borrowers are no worse a risk than the UST!
The City of Buffalo has the seventh-worst housing vacancy rate among America’s major cities, according to figures released Tuesday by the U.S. Census Bureau.
The same federal study shows that Buffalo has the oldest and most inexpensive housing stock among the 81 U.S. cities with at least 100,000 homes.
An estimated 25,060 housing units in Buffalo are unoccupied, yielding a vacancy rate of 17.2 percent. The city has a total of 145,700 units, including free-standing homes, duplexes and apartments.
New Orleans (at 21.5 percent) is saddled with the worst vacancy rate in the study group. The other cities that have worse rates than Buffalo are St. Louis, Detroit, Cincinnati, Baltimore, and Cleveland.
Whoa, what a shock! Hey BB how come mortgage rates are rising?
Item: Fed Holds on Rates, Says Recovery Remains ‘Slow’
The U.S. Federal Reserve said on Tuesday the economic recovery was still too slow to bring down unemployment, reaffirming its commitment to purchase $600 billion in bonds to stimulate growth and create jobs.
Just imagine how bad rates would be if Ben didn’t aim his giant hose and give Amurika a giant money shot in the face! We’d be at 5.1% for sure! INSANELY HIGH RATES THAT CANNOT BE ALLOWED TO HAPPEN!
It seems incredible to me that the Fed has anything to do with employment. Why not just focus on keeping inflation tame, and let Congress deal with employment?
Congress spends its time fundraising and carefully avoiding responsibility.
American Internet Use Catches Up With TV Use ~ nytimes
Americans are now spending as much time using the Internet as they are watching television, and the amount of time people spend on the Internet has increased 121 percent over the last five years, according to a survey published Monday by Forrester Research.
While people younger than 30 years old have spent more time with the Internet than television for several years, Forrester’s survey shows that this is the first year that people in older age groups are also doing so. The amount of time spent on the Internet for personal uses tails off among older groups, ranging from about 12 hours for adults under 30 to about eight hours for people over 66 years old.
12 hours a day sounds about right.
A Tucson Weekly columnist recently alluded to this trend. Her column:
All those political ads remind us: TV needs to adapt—or die
Fun quote from the column:
It’s not that we want to have to figure out how to get the TV and movies we like without the intellectual equivalent of a stinking coat of used crankcase oil. Most of us would rather be shot with tacks than need to scope out our digital-entertainment options, but, really, it gets to the point where what’s coming out of your TV starts to feel worse than doing due diligence on TiVo and Hulu. It feels worse, even, than the prospect of calling Cox Cable. And that’s saying something.
Ron Paul interview on CNBC this afternoon at 4:15pm. We’ll see how much they can mock him in his allotted 2 minutes.
Police: Bellagio heist similar to earlier hold-up
LAS VEGAS – Police say an armed bandit who escaped on a motorcycle with about $1.5 million worth of casino chips from the posh Bellagio resort in Las Vegas may have pulled a similar caper across town less than a week ago.
Police say the Dec. 9 hold-up at the Suncoast also involved a man wearing a helmet who displayed a gun, demanded casino chips and sped away on a black sport motorcycle.
That heist netted less than $20,000 in chips.
Police Lt. Clinton Nichols told The Associated Press that Tuesday’s 3:50 a.m. robbery at the Bellagio happened “about as quick as you can do it.” Police released grainy images showing a man wearing a motorcycle helmet pointing a gun.
No shots were fired, and no one was injured.
Police released grainy images showing a man wearing a motorcycle helmet pointing a gun.
You’d think that someone in Vegas could clean up those images. I mean, jeez louise, don’t they have Photoshop?
The best quality video is known as “Casino Quality.” It’s better than banks, way better.
Chips aren’t legal tender, and each casino has their own branded ones.
Don’t casinos stock enough to replace them all with different designs just in case they get ripped off?
Can Bernanke print casino chips? Just wondering the powers of the FED.
Perhaps the casino wants to handle the matter “in house”
Fed Cites Unemployment in Sticking With Bond Plan- AP
The Federal Reserve said Tuesday it will maintain the pace of its $600 billion Treasury bond-buying program because a slowly improving economy is still too weak to bring down high unemployment.
Another Festivus miracle!
Palm Beach County foreclosures drop to lowest level since 2007
by Kim Miller
The Palm Beach County Clerk and Comptroller’s office just announced that November’s initial foreclosure filings fell to 797 cases, the first time cases fell below 1,000 since May 2007.
No doubt the recent foreclosure moratoriums had something to do with the drop in initail filings as banks and servicers reviewed their paperwork and court documents.
From the clerk’s release:
“The number of initial foreclosure filings in Palm Beach County hit its lowest level in years, with 797 cases filed in November, according to the latest figures available from the Clerk & Comptroller’s office. The last time initial foreclosure filings dipped below 1,000 was in 2007, prior to the spike in foreclosure filings.
Scott Simon is upside down on his understanding of the home purchase budget constraint. If the home you would have purchased a few weeks ago now appears 9 percent more expensive at your purchase budget constraint, based on how much loan you can obtain based on your income and other financial obligations, then you would now be able to pay at most 1/1.09 = 92% as much for that home as you could have paid a few weeks ago. The 8% reduction in the buyer’s purchase budget translates into an 8% drop what that buyer could pay the seller for the same home. Now the seller’s market value may decrease by less than 8%, as he may be able to find some other knifecatcher willing to pay more for the home, but the market value nonetheless goes down as interest rates go up.
Mortgage-Bond Slump No `Fun’ for Housing as Rates Increase: Credit Markets
By Jody Shenn - Dec 14, 2010 8:31 AM PT
The average rate on a typical 30-year fixed-rate mortgage has climbed for four weeks, to an average of 4.61 percent last week, according to Freddie Mac. Photographer: Jim R. Bounds/Bloomberg
Miller Samuel’s Miller Interview Dec. 9
Dec. 9 (Bloomberg) — Jonathan Miller, president and chief executive officer of real estate appraisal and consulting firm Miller Samuel LLC, discusses the outlook for the U.S. housing market. Miller talks with Tom Keene on Bloomberg Television’s “Midday Surveillance.” John Silvia, chief economist at Wells Fargo Securities LLC, also speaks. (Source: Bloomberg)
A slump in government-backed mortgage bonds that’s sent yields to the highest level since May is threatening a recovery in the U.S. housing market, which had been bolstered by record-low borrowing costs.
Yields on Fannie Mae-guaranteed securities that most affect loan rates jumped to 4.22 percent as of 11:28 a.m. in New York, an increase of more than 1 percentage point from an all-time low in October, according to data compiled by Bloomberg.
Higher loan rates “won’t be fun” for a fragile housing market, said Scott Simon, head of mortgage bonds at Newport Beach, California-based Pacific Investment Management Co., manager of the world’s biggest bond fund. “If you were looking at buying a house a few weeks ago, the same house, to you, looks as much as 9 percent more expensive,” he said.
…
This is starting to
By Eliot Kleinberg Palm Beach Post Staff Writer
Updated: 4:36 p.m. Tuesday, Dec. 14, 2010
Cold it was overnight, but not as lethal as had been feared.
But, weary forecasters warned, it could get that bad tonight.
Along the coast, today’s high is expected to reach only the low to mid 50s.
Then, a large area of high pressure in the center of the nation “is going to open the door for more cold temperatures to pour in,” National Weather Service meteorologist Chuck Caracozza said today.
Overnight lows are forecast to drop to 30 at Palm Beach International Airport and the upper 20s along the Treasure Coast.
If they do, they’ll break - and in some cases smash - records, most dating to a historic 1962 freeze.
And here in Tucson, we’re about to get rained on. As in, those big drops of water that fall from the sky.
I’ll believe it when I see it.
I hope DinOR is OK…they had a rare tornado in Oregon not that far from him.
http://www.kval.com/news/local/111879554.html
I even saw a nascent-tornado here south of my house here in Boise today, although it never descended that close to the ground.
Today’s 16 bps jump in the 10-yr Treasury yield will leave a mark.
Treasury yields spike to 7-month highs after Fed
By Blake Ellis, staff reporter
December 14, 2010: 4:59 PM ET
NEW YORK (CNNMoney.com) — Treasuries tumbled Tuesday, sending yields to seven-month highs, after the Federal Reserve kept its bond-buying program intact and said the economy is still recovering.
…
Queasy living for the bond market
“Some people had built up hope that there would be an increase in government bond-purchasing, but that was not announced today,” said Anthony Valeri, an fixed income investment strategist at LPL Financial. “From [the Fed's] perspective, it’s too early to increase the dose because it’s still too early to evaluate the effectiveness of [QE2].”
That disappointment — along with gains in the stock market — added pressure to an early sell-off in the bond market. Following the Fed’s statement, yields on the 10-year note and 30-year bond surged to the highest levels since May.
The yield on the 10-year benchmark note closed at 3.44%, up from 3.28% late Monday.
Meanwhile, the yield on the 30-year bond jumped to 4.5% from 4.4%. The 2-year yield rose to 0.64% from 0.55% and the 5-year yield increased to 2.03% from 1.89%.
While Treasuries staged a slight recovery Monday, prices have been in a downward spiral (with yields rising) as economic data improves. And a better-than-expected report on retail sales Tuesday fueled that optimism early in the session.
There is no shortage of ignorant opinions on the likely effects of eliminating the mortgage interest deduction. Take it from a reporter who was writing back in 2005 about the thrill of Florida real estate investing in the tail winds of hurricanes.
* HOUSE TALK
* DECEMBER 10, 2010, 2:03 P.M. ET
Without Mortgage Deduction, Why Buy a House?
By JUNE FLETCHER
Q: I am a renter who has thought about buying a place, partly to get a break on my taxes. But I hear that the government is considering getting rid of the mortgage interest deduction. If that should happen, why should I, or anyone, buy?
—Dallas
A: All things being equal, most people probably would choose the freedom from commitment of renting over the responsibilities of homeownership.
That’s why the government levels the field and gives owners a break in the form of the mortgage interest deduction.
…
O….M…..G…..
Are people really this dumb?
Short answer : Yes.
Long answer : Yes. Yes they are.
Was there ever a Hurricane June?
There’s a pretty interesting rent-vis-buy comparison at the end of the article. What makes it interesting is that the only reason why the hypothetical buyer does better over time than the hypothetical renter is an assumed rent increase of 5% per year. Speaking as a brand-new landlady, I have no plans to raise any of the apt rents in the next year, and may actually have to lower one of them (out of 6 units). Probably by only 5%-10%, but that’s a lot different from a 5% increase!
“Rent-vrs-buy”
Heard on American Public Media’s Marketplace tonight that until very recently, Freddie Mac’s rent-vrs-buy calculator assumed falling home prices could never happen.
Oops…
Renting a Home
For over one-third of America’s families, renting is the right choice
The dream of homeownership is still very much alive in the United States, however homeownership is not necessarily right, or good, for everyone. Approximately one-third of America’s families rent today, both by choice and financial ability.
In general, renting may be the best option if one or more of the following apply to you:
* Your lifestyle and career require mobility and you do not see yourself staying in a home for more than four years.
* You do not have adequate savings for large – oftentimes unforeseen – investments in a home, such as roof repair, new appliances, or plumbing issues.
* You do not have the time or desire to take on necessary home maintenance that accompanies homeownership.
* You don’t want to be “tied down” and enjoy the amenities that renting can offer, including doormen, pools, and gyms.
* You are building your savings and your credit and plan buying a home in the near future.
* You plan on downsizing or retiring in the near future.
* OPINION
* DECEMBER 14, 2010
The Fed’s Policy Is Working
The rise of long-term Treasury interest rates is evidence that investors are bullish on growth.
BY JEREMY J. SIEGEL
The recent surge in long-term Treasury yields has led many to say that the Fed’s second round of quantitative easing is a failure. The critics predict that QE2 may end up hurting rather than helping the economic recovery, as higher rates nip in the bud any rebound in the housing market and dampen capital spending. But the rise in long-term Treasury rates does not signal that the Fed’s policy has backfired. It is a sign that the Fed’s policy is succeeding.
…
The rise in long-term Treasury rates without a positive change in the unemployment rate means trouble, IMHO.
Financial markets are more forward looking than the labor market. The optimistic scenario is that the bond market has already priced in the increased credit demands which will materialize as the U.S. labor market starts producing jobs again.
Time will tell whether this happens.
Pain clinic operators now accused of ripping off desperate homeowners
By Jane Musgrave Palm Beach Post Staff Writer
Posted: 11:19 a.m. Tuesday, Dec. 14, 2010
A Wellington man who is being investigated for running some of South Florida’s most notorious pain clinics is now accused of ripping off desperate homeowners in a loan modification scam.
In a lawsuit filed in Palm Beach County Circuit Court, Florida Attorney General Bill McCollum accuses Jeff George and his partner Dante Marquez of making “blatant misrepresentations” to homeowners in Florida and across the country. For a fee, they promised to help dig homeowners out of mortgage debt. Instead, they did nothing except pocket the money, according to the complaint filed last week.
Even if they had provided services, the operation they ran under the name of American Home Solutions Group was illegal, attorneys said. State law prohibits people from collecting a fee before the work is done.
George said he was a silent partner in the company and wasn’t involved in day-to-day operations. He said he doubted the veracity of the allegations. But, he acknowledged, given some of his other legal woes, the lawsuit “is the least of my concerns.”
George, his twin brother, Chris, his father, developer John Paul George, and other family members and friends are under investigation for running pain clinics in Palm Beach and Broward counties that also supplied pills on the black market in Kentucky, Ohio and South Carolina, federal prosecutors have said.
Pleasure and pain are closely related.
In Fed We Trust, Sometimes
Bad decisions leave little room for faith.
There’s an old saw in the investing world: don’t fight the Fed. Just as politicians shouldn’t square off with people who buy ink by the barrel, investors shouldn’t buck the folks who can print endless amounts of dollars. If the Fed says it wants rates to go down, and is prepared to buy bonds to make that happen, the market usually complies.
But not this time. Ever since Federal Reserve chairman Ben Bernanke’s announcement in November that the central bank would purchase $600 billion in government bonds in an effort to lower interest rates, politicians, monetary officials, and investors seem to be spoiling for a fight. German Finance Minister Wolfgang Schäuble dubbed the policy “clueless.” A gaggle of right-wing economists and policy wonks penned an angry letter accusing Bernanke of economic malpractice. The bond markets threw a collective fit, pushing up interest rates in defiance. Some of these attacks are motivated by crass politics. But it’s clear now that the Fed no longer possesses the imperium it had in the 1990s because, too frequently, it has been behind the curve.
…
And Greenspan was neither apologetic nor remorseful.
He was somewhat incredulous over how badly things turned out.
If falling prices threaten the economy, how come GDP is growing brusquely even while housing is still in the dumps? Apparently the pundits who said no recovery was possible without a housing market recovery were flat out wrong. The fact that some people who owned too much housing had to sacrifice home equity gains for the greater good of the U.S. economic recovery is the way the cookie crumbles.
Rex Nutting
Dec. 15, 2010, 12:02 a.m. EST
Housing is the forgotten crisis
Commentary: Falling prices once again threaten economy
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) — The U.S. economy has made a lot of progress since the dark days of September 2008 — investors are happy, bankers are secure, markets are functioning and businesses are flush. No depression here.
But what about the rest of us? When does the recovery kick in?
The stock market has finally climbed back where it was on that fateful weekend when Lehman Bros. filed for bankruptcy, but there has been little relief for the average family.
For typical Americans, two things determine their financial well-being: Their job and the equity they have in their home. They get almost all of their income from wages and salaries, while most of their wealth is tied up in their house. When wages and house prices are rising, they are confident. When wages and house prices are falling, they are fearful.
Policy makers may have rescued the banks, but they haven’t figured out a way to bring back the jobs that were lost, nor have they found any answer to the problem that was the nucleus of the crisis: housing.
…
Spain needs some porcine beauticians to act fast!
Europe Markets
Dec. 15, 2010, 4:09 a.m. EST
Spanish downgrade fears weigh on Europe
Bank stocks drop across region; Novartis rises after Alcon deal
By Simon Kennedy, MarketWatch
LONDON (MarketWatch) — Spain led European stock markets lower Wednesday after Moody’s Investors Service warned it may downgrade the country’s Aa1 credit rating.
…
Moody’s – Negative US Outlook Possible On Tax Cuts
Posted on December 13, 2010 by Yohay
Jamie Coleman reports that Moody’s reacted to the deal on tax cuts in the US – they stated that there’s a higher chance of a negative outlook on the American perfect AAA credit rating over the next two years.
…