Bits Bucket for July 20, 2011
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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I’m kinda gettin’ freaked out. I thought the $4T buy down on the “debt” (as many articles have it worded) was actually on the existing DEBT, not the deficit over some period of time.
But after reading some of the articles about the Gang of Six proposal, that’s not the case. In actuality, it seems they are proposing to decrease the rate at which we are taking on more debt.
Are we insolvent?
As long as the politicians tell you be afraid, you have nothing to fear. It’s when they tell you “everything is fine” that you really have to worry. We already hit the debt ceiling about a month ago. The country did not implode. We currently have incoming revenue and outgoing expenses. The outgoing expenses are about a 2-1 ratio against the income. In the time since we hit the debt ceiling until now, that 50% difference has been made up by deferring payments to various things, I believe including Social Security. Social Security had some liquidity and I think they are using that up a bit so they can pay other expenses.
According to Geitner, come Aug 2, he won’t have that kind of slack. BUT, the fed can easily just print up some money to pay the difference. The only thing is, they won’t be able to collect interest on it! That’s the real story here, bankers are trying to scare you because we might be about to issue some money that isn’t tied to T-Bills paying an interest rate. In other words money they won’t get a cut of in the form of T-Bill interest. Then, their money will be slowly inflated away just like our “commoner’s money”.
Further, from what I understand, the Fed has about 2T of treasury notes on their books. They could simply forgive this debt or retire it, and our debt ceiling would go from 14T to 12T and we would be well under the limit. Don’t you wonder why we don’t do that? Seems funny huh? So again, don’t worry, a default won’t happen, the bankers are too scared that their little empires would collapse and worse case scenario we will print up some dollar bills with no T-Bill backing and go on until they finagle another 2T of T-Bill debt onto the taxpayer.
As long as the politicians tell you be afraid, you have nothing to fear. It’s when they tell you “everything is fine” that you really have to worry.
Nicely put. I appreciate the rest of the post, too.
Same here.
Wait.. What?
Treasury can not print up federal reserve notes (dollars)… Only the Federal Reserve can, and only by buying US Treasuries or other bank issued securities.
How does the treasury spend money it doesn’t have when it doesn’t really own the printing press anymore?
The FED creates a shadow bank that borrows trillions and uses it all to buy treasuries, then it goes bk or they have WS firms do this and promise to make them whole with easy money later if there are losses.
I can’t believe how upside down all this is.
It seems to me the worst credit risk is an entity (a person, a business, a country) that doesn’t care about how much debt it/they accumulate - something we as a nation were all about up to about a year-or-so ago. THOSE are the ones you don’t want to loan money to.
IMO the ones you DO want to loan money to are the ones who decide to get their financial house in order and will strive to live within their means - which (finally) seems to be us.
China is lending us money because we are the main buyers of their stuff.
It will be interesting (in the Chinese sense) when the American companies decide that Chinese labor is too expensive and they move the jobs from China to South Sudan. Will the Chinese throw those old and unemployed out into the street, or will they call upon the American debt money to take care of those former workers who made China great?
“they move the jobs from China to South Sudan.”
China has a huge presence in Africa. “Wherever you go, there we are!”
True, but that won’t provide jobs to masses back home.
Ha-ha, like Mexico, they’re exporting their masses. I was somewhat amused at the reports of how China was pulling their citizens out of North Africa when the “Arab Spring” got underway. Few thousand here, few thousand there, pretty soon you’re talking real population.
Those aren’t Chinese people. They’re Martians. China was colonized by Mars. Google it.
All the Martians I’ve met were red (2 arms, 2 legs) or green (2 arms, 2 legs,2 that could do duty as either).
“Ha-ha, like Mexico, they’re exporting their masses”
They’d have to export 300-400 million to have the same percentage of expats as Mexico.
an moody’s (how can anyone take them seriusly about anything) suggested we get rid of the debt ceiling all together just the other day…problem solved!
“IMO the ones you DO want to loan money to are the ones who decide to get their financial house in order and will strive to live within their means…”
A colleague at work whose family lives abroad cancelled all but one of his credit cards when he went home to stay with them for a spell. After returning to the U.S., he discovered that his credit rating went down when he cancelled all those cards.
So how is it that demonstrating that one credit card is enough for you to make ends meet is indicative that you are a worse credit risk than the guy who keeps all ten cards revolving at their credit limits?
Yep, the credit rating system is 180 degrees from where it once was. Having a bunch of open credit card lines was looked at as a potential for someone to over extend themselves so it had an adverse effect on your credit. Not anymore, perhaps one day again though.
Having a line of credit cancelled has always effected your credit rating.
On a scale of 1 to 850, how likely is this person to enrich the banking industry? That’s your credit score.
I was recently faced with the requirement to become Verified (their capitalization, not mine) on PayPal. If I didn’t do so, no more sending or receiving money via the Pal.
The choices were between giving PayPal access to my bank account (uh-uh, no way, not gonna happen) or signing up for their credit card.
Trust me, the last thing I wanted was PayPal’s tentacles in my bank account. So, I signed up for the credit card, got it, and threw it into a drawer. Where it will stay until Hades freezes over.
I already have another credit card, and I pay it down to zero every month. Never carried a balance on it either.
Slim, I got the same notice from Paypal. Did nothing about it. Then a couple weeks ago I had to order parts for my pressure washer from a company that was new to me, and I used my same old Paypal account with the same credit card I had used in the past. It worked fine. So I wonder what’s up with this ‘verification’ scheme?
So I wonder what’s up with this ‘verification’ scheme?
If you’re using money in your PayPal account, the PayPal PTB say that you must become Verified if your sending/receiving amount trips the $10,000 mark.
In order to become Verified, you either let them stick a tentacle into your bank account or apply for their credit card. I nixed the bank account option and got the PayPal credit card. Which is cooling its heels in a drawer for the foreseeable future.
I think Ticketmaster has this same Verification scheme going.
My cc is with WF. I assume other banks have this going as well.
That explains it. Any big-ticket items ourchased in our household go directly onto the cc we have linked to Paypal. I only use Paypal for purchases from companies I don’t know well and would probably never buy a lot from anyway.
That should be “purchased”. Long day here.
Are we insolvent?
Is any developed country not saddled with un repayable debt?
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
The world average is about 59% of GDP. And most of the world pays higher interest rates than we do.
The Banking Clan owns the whole damn world!
The Banking Clan owns the whole damn world!
Exactly. Gold speaks the truth in a world of liars. Fiat currencies have allowed the banking clan to gain control over the world. Yes, we presently have low interest rates on our debt but are we really different than the FB in 2006 sitting in his McMansion with a 2% teaser rate set to rise to 9% in a few years? Yes, he could make the mortgage at 2% but did he have a chance at 9%? Today, Greece is paying 40% for money it is borrowing according to Bloomberg radio. Back in the 1980’s to stop inflation the U.S. government borrowed money at double digit rates. On a 14.3 trillion dollar debt if we were to pay 10% interest virtually all of our tax revenues would go just to service the debt, but we still continue to borrow and add to that total. How long can we keep interest rates below the rate of inflation to allow us to service that debt? The answers are obvious and they answer the first question, we are insolvent.
Yes, we presently have low interest rates on our debt but are we really different than the FB in 2006 sitting in his McMansion with a 2% teaser rate set to rise to 9% in a few years?
When it comes to that (and it will) we will default. At that point things will get “interesting” and we will be scrambling to make our own consumer goods again. It will be a period of turmoil and pain.
This will be teh time when banks and the elite sitting on piles of cash will swoop in an buy up our roads, parks, city buildings, buisnesses etc for pennies on the dollar.
This will be the time when banks and the elite sitting on piles of cash will swoop in an buy up our roads, parks, city buildings, businesses etc for pennies on the dollar.
With the money they stole from us and then charged us interest on it.
“With the money they stole from us and then charged us interest on it.”
There’s a great cartoon taped to the fridge in the break room here:
A guy walks up to an ATM, which turns into a transformer. It tells him that the financial system is in peril and proceeds to mug him, gobbling up the money in his wallet, after which it announces that stability is restored. The victim demands his money back. The robot says of course and morphs into an ATM with a sign that says: “Loans”
The Banking Clan owns the whole damn world!
What used to be a tin foil hat statement is now merely the largest elephant in the room.
I thought it was always about decreasing the rate of increase…which makes the whole discussion farcical.
I don’t think anyone who was paying close attention could have interpreted the talks as both balancing the budget completely and reducing the existing debt by another $4 trillion in 10 years on top of that. It is OK not to pay close attention, and the details are pretty darn complicated, but the fact that no one was talking about balancing the budget on top of the reductions of future spending was not hard to see.
Talk about a balanced budget (by starting a push for a Constitutional amendment, not by actually suggesting what cuts to make to do it) only happened in the past few days. Even Paul Ryans budget (the one that the was overwhelmingly supported by House Republicans and put Medicare on to vouchers) requires massive increases in the debt limit for years to come.
I think the issue is one of messaging by the MSM. They use the words “debt” and “deficit” almost interchangeably.
Yes, we are insolvent. The only solution is to stop giving our productive capacity away to nations who have institutionalized slavery.
C’mon now. We and the UK perfected institutional slavery and we’re the leading practitioners of it.
Some Congressmen want to keep federally-guaranteed “affordable housing loans” for millionaires in place indefinitely, at taxpayers’ expense.
July 15, 2011, 12:03 p.m. EDT
Bipartisan bill backs high ‘conforming’ loan limit
By Ronald D. Orol
WASHINGTON (MarketWatch) - Butting heads with the Obama administration, two House lawmakers on Friday introduced a bipartisan bill that would allow the maximum size of loans that can be guaranteed by government controlled mortgage giants Fannie Mae and Freddie Mac remain for two years at the current level of $729,750. Without action by Congress, the limit on loans that Fannie and Freddie can guarantee will drop back to a maximum of $625,500 effective in September. The bill, introduced by Reps. John Campbell (R., Calif.) and Gary Ackerman (D., N.Y.), goes against a Treasury recommendation made in February seeking that Congress not pass new legislation continuing the current level. Many Republicans support returning to the lower limit, which would make it more expensive for some higher-end borrowers to obtain access to credit at the same time as it limits potential costs to taxpayers.
This number (729K) is so outrageous; it’s only because most people can’t do math that we (as a people) let that stand. To have a 729K loan, you need about 250-300K in income. The government is subsidizing people who make over 1/4 of a million dollars a year? I mean, come on, that’s like “burn down the courthouse” outrageous!
They should drop the conforming loan limit (across the country) to about 200K. That’s about the number that a median family can afford, and that’s where the subsidy (if you believe it should exist at all) should be targeted.
Even the normal limits of around 400K are way too high. That’s a HH income of around 130K. Still really “over the top”.
forget about raising the ordianry marginal income tax rate.
1. reduce the loan limit to 200k (as you suggested).
2. repeal the favorable capital gains rate…maybe keep it for a 3-5 year holding period rather than a one year holding period.
3. repeal the favorable dividend rate.
4. repeal the MID.
stick a fork in this god forsaken FIRE economy.
x eleventyzillion.
Even $200K is a stretch if the supposed purpose of the loan is to provide “affordable housing” for low-income people. How many low-income families can afford to buy even a $200K+ home?
That’s easy.. None.
200K house is going to require a HH income of about 60-70K. That’s middle class; not “low income”.
Exactly. It wasn’t that long ago that a 200K house was a “nice” house, something you might trade up to when you earned more money. And salaries today aren’t all that much higher than they were back then.
Exactly Colorado.
I recall before all this BS started when 200k was pretty much the peak price and it was *alot* of house. This was B4 mcmansions, granite and all other Great Housing Fraud accoutrements. It usually included things like multiple acre lots(>20), generators, pole barns, ag or construction equipment, etc.
It wasn’t that long ago that a 200K house was a “nice” house, something you might trade up to when you earned more money.
A couple of years ago, I was talking with another local artiste. We were in his studio, which is just south of Downtown Tucson. Nearby is an infill development that trumpets its green-ness far and wide.
Well, it seems that then, as now, quite a few of those oh-so-green Armory Park del Sol places are sporting “for sale” signs. My fellow artiste was aghast at the asking prices. “A quarter of a million dollars!” he exclaimed.
Those asking (read: wishing) prices haven’t come down much since.
A $200,000 house when I was growing up (25) years ago was a nice house on a lake somewhere. The house I grew up in cost my parents $80,000 in 1988 and had over 2,000 square feet for 4 boys and my mom and step dad. Plenty of room for all of us.
As much as those changes would hurt me personally.. I think I’d agree with all those suggestions.
Capital gains rates being low are a total gift to upper income individuals, instead of paying 33%, I pay 1/2 for all my earnings from stock.
And, of course, there’s the muni-bond loophole. What a whopper that one is. Makes borrowing costs much lower for local governments.. But do we want to encourage them to borrow more?
Repealing the MID is probably the one that I most agree with, that’s a total handout to the wealthy/upper class, and it’s always used by RE agents to distort the cost of buying a house. Telling a couple buying a 150K house about the “tax savings” they are going to enjoy is a total red herring, and a particularly nasty sales tactic by realtors.
Now, for people buying 500K homes? That’s a different story; the property taxes alone will probably take most past the standard deduction. And then layer on all the other deductions that people in higher income brackets can have (or create).. It’s a big deal, but not at all “fair” and it encourages bad behavior (borrowing against the house first, instead of using at as the last source of available credit).
“To have a 729K loan, you need about 250-300K in income.”
I doubt a very high percentage of Californians with 729K loans have this much income. Do you remember the story a few years ago about the Central Valley ag worker family which borrowed a $700K+ loan on something like $30K income?
You’re probably right. Which is why so many of them can’t afford the payments of an old fashioned ammortizing 30 yr FRM on their homes.
The monthly payment on 729k at 4.5% amortized on a 30 year schedule is $3,693.74.
In the old school days of underwriting, a borrower’s housing payment would not be approved if it was over 28% of the borrower’s verifiable income.
$3,693.74/.28 = $13,192
$13,192 x 12= $158.3k per year verifiable annual income.
This ignores property taxes, property insurance, and mortgage insurance if the down payment was below 20%. Some loan programs allowed pushing the housing ratio from 28% to 31 or 33% if there were mitigating factors.
There was a second ratio an underwriter would look at and that included all of the borrower’s debt (housing, car loans, student loans, credit cards, alimony, child support, etc.)
Old school value was no more than 36-38% of verifiable income.
A 700K loan on 150K in income would be financial suicide. I have a 400K loan, significantly more income and it’s not “trivial”, it impacts my lifestyle and is a big part of my monthly income. My monthly payment (in FL) for mortgage + insurance + taxes + HOA on a 400K is almost exactly 3.2K a month.
No way in he** someone with a 150K income is going to handle a 3.7K MTG (which is more like 4.5-5K w/taxes and insurance).
Another problem w/using those figures today….they were determined when people had pensions and could be confident of ss coverage, health coverage that paid most of the cost of care, consistent employment and at a time when public education alone got you employment (negating the need for expensive additional education).
It’s a whole different ball of wax now.
How about introducing a bill to get rid of Fannie Mae and Freddie Mac entirely and lowering the loan guarantee limit to something like $0?
…and while we’re at it, get rid of that interest tax deduction. I thought you jokers are having a huge deficit and want to spend less money, not?
I like that. You aren’t totally getting rid of the limit. You’re just reducing it to zero. It’s softer that way.
Wells Fargo turns to cost cuts as recovery stalls
NEW YORK (AP) — The nation’s largest mortgage lender is turning to cost-cutting as the economy sputters and the grinding housing slump means waning profits from new mortgages.
Wells Fargo & Co. on Tuesday posted a 30 percent leap in second-quarter profit, boosted by the release of a big chunk of the money set aside to cover defaulted loans and foreclosed mortgages. But the San Francisco bank reported a sharp decline in the number of new mortgages it wrote, reflecting the ongoing weakness in the housing market and a drop in refinancing activity.
Bank executives detailed plans for cutting expenses to $11 billion per quarter by the end of next year. Expenses in the quarter were $12.48 billion.
The San Francisco-based bank said net income for the three months ended June 30 rose to $3.73 billion, or 70 cents per share, compared with $2.88 billion, or 55 cents per share, in the year-ago quarter.
Analysts, on average, were expecting profit of 69 cents per share, according to data provided by FactSet.
Net interest income, or the money earned from deposits and loans, fell 7 percent to $10.68 billion from $11.45 billion last year.
Total loans fell 2 percent to $751.92 billion, although the bank did report growth in auto loans, private student lending and credit cards.
“the bank did report growth in auto loans, private student lending and credit cards.”
Great! Let’s keep the masses shackled into debt.
It’s like I keep telling our NY DJ: There won’t be any form of mass debt forgiveness for the little people. WF needs to keep charging them 20% interest on on the CC balances they can’t pay off.
True so when will the little people just quit paying? Soon I hope.
We have created a society where its very hard to get by without CCs. Try buying an airline ticket with cash and you’ll have Homeland Security all over you like a cheap suit. Try buying something online with cash.
Yes, there are ways around all this, but it has become a hassle (and now they are trying to railroad us into having to use overpriced smart phones as our credit cards).
I don’t know what it will take to get the under $500/wk income crowd to mass default on their CC’s. Maybe if we repreal minimum wage and the bottom falls out of their wages?
Yes, there are ways around all this, but it has become a hassle (and now they are trying to railroad us into having to use overpriced smart phones as our credit cards).
Good thing I’m hard of hearing.
I can’t use cell phones, smart or otherwise, because of their ergonomics. They just don’t block out the background noise so I can hear what’s being said on the other end of the call.
you don’t have to repeal minimum wage just inflate food and fuel costs. The stealth tax and or wage cut for the working class.
The don’t tax the rich crowd always crows about the poor not paying federal income tax, they negate the massive hit they take via the inflation tax and teh state local and payroll taxes they pay.
I can’t use cell phones, smart or otherwise, because of their ergonomics. They just don’t block out the background noise so I can hear what’s being said on the other end of the call.
Have you tried loud ear buds or bluetooth headphones? I would think that there would be a combination that would work nicely. I think there are even bluetooth headphones that seal around the ears like old-fashioned stereo headphones. I’ve wondered about that sort of thing because if I get hard of hearing when I’m older I’d like to have a way to hear things like the TV without having to make everybody else in the room miserable. Seems like the same thing tech solutions could apply to phones.
you don’t have to repeal minimum wage just inflate food and fuel costs. The stealth tax and or wage cut for the working class.
Some states like Colorado index minimum wage to inflation. Of course, they use the feds’ bogus numbers.
The don’t tax the rich crowd always crows about the poor not paying federal income tax, they negate the massive hit they take via the inflation tax and teh state local and payroll taxes they pay.
What the “Don’t tax the rich, tax the poor instead” crowd forget is that they will also be hit with those taxes that target the poor, while they wave their “Don’t tread on me” flags.
Money is someone elses debt. If no one is going into debt, then others can’t get richer.
Screw WF. I have my free checking there because of their ATM network all over the western US, but they won’t make any profit from me. Credit Union of Colorado gave me a platinum Visa with 8.25% APR (and a whopping 0.1% on my savings).
and a whopping 0.1% on my savings
How is anyone supposed to retire on that kind of interest?
By cutting the can of cat food into 7 equally sized pie slices to make it last all week.
As usual the man on the street will have no way of knowing what is really coming his way via D.C…. Until it does.
Huge deficit-cutting bill sails through GOP House
Huge deficit-cutting bill races through Republican House; bipartisan effort picks up support
WASHINGTON (AP) — Defying a veto threat, the Republican-controlled House voted Tuesday night to slice federal spending by $6 trillion and require a constitutional balanced budget amendment to be sent to the states in exchange for averting a threatened Aug. 2 government default.
The 234-190 vote marked the power of deeply conservative first-term Republicans, and it stood in contrast to calls at the White House and in the Senate for a late stab at bipartisanship to solve the nation’s looming debt crisis.
President Barack Obama and a startling number of Republican senators lauded a deficit-reduction plan put forward earlier in the day by a bipartisan “Gang of Six” lawmakers that calls for $1 trillion in what sponsors delicately called “additional revenue” and some critics swiftly labeled as higher taxes.
The president said he hoped congressional leaders would “start talking turkey” on a deal to reduce deficits and raise the $14.3 trillion debt limit as soon as Wednesday, using that plan as a roadmap.
Wall Street cheered the news of possible compromise as well. The Dow Jones industrials average soared 202 points, the biggest one-day leap this year.
“As usual the man on the street will have no way of knowing what is really coming his way via D.C… Until it does.”
One thing that is NOT really coming his way via D.C. is the money he was promised.
And he DOES have a way of knowing this but (as usual) he chooses not to look.
More on the current Gang of Six plan (cnn)
—–
“Under the Gang of Six plan, $500 billion in budget savings would be immediately imposed, with marginal income tax rates reduced and the controversial alternative minimum tax ultimately abolished.
The plan would create three tax brackets with rates from 8% to 12%, 14% to 22%, and 23% to 29% — part of a new structure designed to generate an additional $1 trillion in revenue. It would require cost changes to Medicare’s growth rate formula, as well as $80 billion in Pentagon cuts…
However, the top two Democrats in the Senate said they don’t think there is enough time before the government needs to borrow more money on August 2 to pass the comprehensive Gang of Six plan.”
—–
I can see why there isn’t time to pass the Gang of Six plan. Imagine hammering out major changes in the tax code in two weeks. Won’t happen. My guess is that the final deal will be halfway between McConnell’s fallbakc plan and the Gang of Six plan: raise the limit now, on the condition that they hammer out and pass the Gang of Six within some time limit.
By the way, lowering that marginal rate WON’T create jobs. These tax games are just this year’s profit gimmick.
Don’t you guys see? Companies have to make a profit every year. Not only do they have to make a profit every year, they have to MORE profit this year than they did last year. All to feed the Bottomless Stockholder Maw. So each year, they have to turn some new profit gimmick. It could be gutting a union, raising productivity with computers, outsourcing the cleaning crew to a subcontractor stocked with illegals, cutting benefits, passing off health insurance to Medicaid, moving workers to Foxconn City, bribing away an expensive environmental regulation, or extending more credit to broke customers. Now, it’s on to bribing away the tax code altogether. If they have to, they can get the government to supply their profits for them, in the form of T-bill tricks and bailouts. But the Bottomless Stockholder Maw MUST. BE. FED. I don’t know how this is gonna end.
And good god, how could I forget: declaring “bankruptcy” for th sole purpose of eliminating promised pensions, while keeping the stockholder dividends whole.
You mean like the GM bankruptcy?
Oh wait! That went the other way.
Don’t get too hung up on the GM bail out. A lot of workers were let go and replaced by guys paid only $14/hr.
The people upset that bond holders were in line behind pensions in the GM bankruptcy seem to conveniently forget that it wasn’t company money, but rather government money that was being divided up.
Government stepped in and said… okay bondholders… with no government intervention, the company shuts down, pays most of its secured debts, and you get zip….
Or, we can step in with government money to save them, but we’re giving the bulk of that government money to the pensions…. so, let’s bargain on how much you need to get out of the way of the government rescue of the pension….
The bond holders may have wanted $1 on the $1, but that was never a possibility and not the point of the government money…. If they did not agree to putting the pensions first, then they would have gotten no government money, meaning zip, zilch, nada for them.
So the bond holders got the privilege of losing all their money AND bailing out the union with their taxes. I have a friend that lost mid 5 figures in GM bonds. I think in return for his loss he’d have preferred that GM actually be forced to downsize and starting making more cars he (and the rest of the market) wants rather than continuing to build rent-a-cars. Another idea he had that made sense to me was to simply be given a GM car in return for his bonds. In his case he felt he’d lost enough to justify a Corvette.
The PBGC will give a company it’s pension obligation back if it becomes successful after a bankruptcy.
“Gang of Six”
Gag of Sicks.
“Gang of Six”
Six geese a-laying
Don’t you guys see? Companies have to make a profit every year. Not only do they have to make a profit every year, they have to MORE profit this year than they did last year.
And if they don’t meet their profit targets its a “loss”, which is followed by layoffs and paycuts, regardkess of how profitable the company is.
All an indication that stock prices are still too high, and based on speculation on future growth and not dividends.
Yup, I won’t soon forget watching that lobbyist on PBS threatening oil jobs if the government tried to tax profit. Rather than go from $34 B in profit to $33 B in profit, they would cut $1 B in benefits and jobs and maintain their $34 B in profit that way.
By the way, I was referring to airlines, not to GM. Once they dumped pensions, they had to go on to the next gimmick, which was to purposely constrict the supply of flights to keep ticket prices high. We’re now packed in like sardines. Then, once they milked the profit out of that, their current gimmick is the fee scam. They pay lower taxes on fees than they do on ticket revenue. So services that used to be included in ticket prices like bags or nicer boarding or whatever, is now a separate fee. That one is close to being milked dry too. I don’t know what’s next…
I don’t know what’s next…
$5 to use the lav?
I am so glad that I rarely fly. The last time I parked my keister in an overflown and undermaintained airliner was in 2009.
Rather than go from $34 B in profit to $33 B in profit, they would cut $1 B in benefits and jobs and maintain their $34 B in profit that way.
That’s exactly what HP did in 2008. 5% pay cuts across the board, and no, they were not temporary. I heard through the grapevine that the new CEO will restore the reduced pay, but only for top performers.
Next? Raising prices so high that no one travels by plane except for times when they can’t imagine not doing it and they can’t get enough vacation time to travel another way. Making flying a real luxury good. I took one trip by airplane when I was a kid and my parents saved for that vacation for years. The next time was for an interview my senior year of college and that was paid for by the company.
I recently bought my Thanksgiving ticket - over $400 to get from DC to Vermont and back. I did get it out of the airport that can be reached by subway for less than $4 each way and at the prime time of the afternoon on the Wednesday before, but that is an expensive ticket. If I had to move 3 or 4 people, I’d say the heck with it and drive even if it meant leaving at 4:00 AM. Even with 2 people it would be a decision.
There was one option for a less expensive ticket, but it required changing planes in New York (JFK), with a tight turn around and even under regular circumstances (not the day before Thanksgiving) the on-time stats of the flights were something like 40% and 70%. Not good odds, plus it would have meant leaving much earlier in the morning and from an airport that pretty much requires driving and parking unless you want to take a cab or van service.
Like I said up top, a luxury good.
Airline fees are not taxed.
I flew DFW-JFK for $150 last year.
Taxi from JFK to Manhattan(about 15 miles) and back ran me $130.
Polly, the B30 metrobus is a direct express between Greenbelt metro and BWI. So it may take a little longer than flying out of National, but the savings are often noticeable.
Polly, the B30 metrobus is a direct express between Greenbelt metro and BWI. So it may take a little longer than flying out of National, but the savings are often noticeable.
Can you put a bicycle on this bus? (Guess what Yours Truly wants to bring to DC…)
DC to Vermont is drivable. West coast to east coast just takes too long. Drive 5 days each way or take the train for 2.5 days each way or fly 6-8 hours.
No flights out of BWI for this route. AirTran (I think) flew it for a while out of BWI, but they stopped and I called the airport to see if there were any rumors about it coming back. There weren’t. It has been a few years.
Only other choice was Dulles and the prices on direct flights were indistinguishable. Like I said, I could have gotten a cheaper fare if I was willing to take a huge risk on not getting there at all. I didn’t want to.
I definitely didn’t want to drive both ways by myself. Could have looked for a train but that would have been a very, very long day. Could have looked for a flight to an airport along the route my parents will be driving, but they prefer not to have their timing dictated by my schedule.
I can manage the expensive ticket once a year and I like Thanksgiving with my family. But at these prices it is a luxury good - a decision, not an assumption. And buying early enough to get on the exact flight you want helps a bit with the sting.
It seems that the airlines have discovered that they can make more money with this type of pricing and fewer customers. Their choice. But they have to know that they risk more and more people deciding they can do without it.
You seem to miss the real problems.
When I lived in Santa Barbara it cost me $250 to fly to SanFrancisco in a DC 3.
That was, at that time, 1/3 of my monthly salary.
Now my retired salary is about 10 x that salary and the cost to fly is still below $250, and it is a hell of a lot quicker.
Given inflation of incomes over the years the cost to fly should now be about$2,500.
So the bit about the airlines screwing the customers in a little on the bogus side.
You just don’t realize what a great deal it really is now!
And I do not work for the airlines.
All figures above are estimates, not actual.
When I was in high school gasoline was 15 cents a gallon and the average wage was 35-50 cents an hour. Consider what gasoline should cost now if compared to wages today.
Oh I know flying is very cheap these days. On every flight I am on, which is like every two or three weeks, several families get on US Airways flight first. Then First class gets on. Once recently I saw a family of six get on. I was calculating in my head what that cost. It was $340 a ticket if you bought well enough in advance. Not sure what the price per kid is though.
And then on another flight a disgusting sight. A hip-hop style punk got on. His jeans down deliberately to show his undershorts. His baseball cap askew. I hate that style, but I’m in an older generation. It basically is disrespect.
I thought that was bad until I read about the cross dressing guy in only a tiny bikini flying out of Fort Lauderdale. They allowed him to fly the flight to where ever.
jack,
In the times you are talking about, people rarely flew to get together for Thanksgiving. At that time, flying was a luxury good or a business expense. Normal people didn’t fly if the ticket was 1/3 of their monthly salary, not for an event that happened every year.
We may not be at the point where flying is as expensive as it used to be, but with prices going up and average wages going down, we are moving to a place where more people will decide not to fly. Airlines don’t care as long as the profits go up and that is a perfectly plausible outcome as long as they keep the supply down.
The Senate will not pass it and the President will veto it. It does not raise taxes on the wealthy or cut their benefits in any way.
Guys:
You do realize that the PTB is finally getting bit in the arse on this one, right? No deal means BIG PAIN for the privileged US corporatists.
Every year the house passes a bill making flag burning illegal, and it passes a bill making Christianity the offical religion (or requiring prayer in school or some such). And the Senate NEVER even opens debate on the bill.
It is just congressmen making a statement that they know will never be law. It is pure showboating. All style with no substance.
It is a colossal waste of time.
I would love to have school prayer passed, just to watch the fundies have conniptions when a Hail Mary is prayed or prayers are offered to Krishna.
Not me. No school prayer. Not even for a prank.
Great plan, more credit…
EU May Use Bailout Fund for Emergency Credit
(Bloomberg)
European officials are considering steps previously rejected by Germany, including the use of precautionary credit lines, to prevent the spread of the region’s debt crisis, a person close to the talks said.
Other options up for discussion at tomorrow’s Brussels summit include enabling the main 440 billion euro ($624 billion) rescue fund to lend to recapitalize banks, said the person, who declined to be named because the talks are in progress. Nothing will be decided until leaders convene.
Together with a second Greek aid package, the goal is to prove to markets that Europe has the will and the tools to prevent the crisis from engulfing Spain and Italy.
That raises the pressure on German Chancellor Angela Merkel, who vetoed proposals to put more weapons in the rescue fund’s arsenal earlier this year amid misplaced optimism that Greece was turning the corner.
U.S. President Barack Obama weighed in yesterday when he discussed with Merkel by phone the need to deal “effectively” with the crisis. Today she hosts French President Nicolas Sarkozy, who has swayed her stance on the debt crisis in the past.
prevent the spread of the region’s debt crisis by adding more debt.
sounds good.
Germany is the linchpin of this entire mess called the EURO zone. They have to bailout everything and everybody that made poor financial descisions. Other countries that are net payers (as much on a per capita basis but less overall due to their smaller size) are Netherlands, Austria and Finland. France contributes some but has enough problems of their own. Luxembourg is a net payer, but also the main financial parasite, similar to Wall Street.
It appears that the parasites (PIIGS) has grown larger than the host. That only leaves 2 options for the host. Die or run away.
Any idea what CDS on German debt have been doing over the last several month? I was trying to find the lastest rates but had no luck. I bet they have been rising. If Germany gurantees all the PIIGS and banking debt then Germany will default on its obligations, that’s a 100% certainty. The only thing they (Germany, Netherlands, Austria and Finland) can do is to save themselves. It’s too late to save the EURO (zone). Of course they are run by politicians, just like the US, so they might try and die trying they will.
i may be wrong…but isn’t germany to the euro zone as china is to the united states and as bankster is to FB?
germany benefited greatly by the other members’ poor financial decisions through an artificially inflated export economy (to those members’).
just as.
the bankster benefited greatly by the FBs over indulgence with easy credit.
Germany cut the wages to the bare bone and thus had an advantage over other countries in terms of cheap exports. Of course those imbalances contributed to situations such as the one we’re now experiencing. Poor management, corruption, incompetence, tax evasion to mention a few also contributed to the current disaster.
I wouldn’t go as far as saying that Germany benefitted. The majority of people that had their wages cut certainly did not benefit one bit. Some financial parasites benefitted to a large extend.
You never really benefit by holding IOUs from some dubious debtor, not China, not Germany and not BoA.
But Germany also has higher tariffs and lots of worker protections/unions.
That makes it very different from China or the US.
However, your point is taken.
NO china also has high tariffs and trade restrictions. They like Germany protect their industries.
Yeah measton, but they don’t have protections for workers.
Lockheed Announces Voluntary Layoffs
By ZACHARY FRYER-BIGGS - Defense News
Lockheed Martin Corporation announced July 19 that it would be offering a voluntary layoff program to 6,500 employees.
The employees, representing the entire workforce at corporate headquarters and other business services staff, will have until August 12 to volunteer. The company will decide in mid-August if involuntary layoffs are necessary.
“It is not targeted, it is very broad,” Jennifer Whitlow, a spokesperson for Lockheed, said.
Whitlow added that the company expects that roughly 2 percent of the 6,500 will opt to depart.
The cuts come on the footsteps of announced reductions to the aeronautics and space divisions totaling 2,700 employees.
“It really is from our perspective our responsibility to continue to respond to the needs of our customers,” Whitlow said, indicating that the move would help Lockheed keep prices down.
Hmmm, big firms like Lockheed usually offer “early retirement” to targeted employees, meaning they fully vest the older employees pensions. Of course this restricts the deal to older employees as new hires often aren’t eligible for pensions. And those volunteering for “early retirement” won’t be able to collect any until they reach retirement age anyway, which at most companies is in the mid 60’s.
What is interesting is that there is no mention of “early retirement” as a carrot in the article. Perhaps that’s also fallen to the wayside. I also wonder how much severance pay will be offered? I’m guessing it will be a pittance by historial standands.
Denver Post reporting today that 750 of the job cuts are in Colorado.
The article says:
Those who choose to leave under the program will receive a “competitive severance package,”
Competitive? Just what exactly does that mean? 1 week of pay per year of service, capped at 15 weeks?
Yeah, what are they competing for? They are getting rid of people, not hiring them. There is no competition for severance packages.
When I worked at HP I had periodic phone sessions with an HP team in Bangalore. When I told them that severance pay was not defined by law in the US they thought I was joking. Then I told them that paid time off isn’t required either.
They were stunned.
The severance package is “competitive” with working the actual job.
Say you’re 61 and close to retirement, have a small pile put away, and you’re tired of the rat race. If they offer you a six-month severance and pay for COBRA, it might be worth your while to not work. You could collect half-pay for resting at home. Or you could spend that time looking for another job. Or setting up some consulting at home. Or use it as an early retirement.
You can retire at 55 from a lot of private companies if you have enough years in.
I retired from my company at 52 when I sold it.
Best retirement package I ever saw.
“If they offer you a six-month severance”
Does anyone still offer that much?
“You can retire at 55 from a lot of private companies if you have enough years in.”
Back when HP still had a pension plan you could be fully vested by that age, but you had to wait until you were in your 60’s to collect the full benefit.
Trading current expenses for future pension liabilities…I smell a bankruptcy in their future.
Not a problem — they’ll use bankruptcy to foist those pensions off onto that broke government agency. They airlines perfected that little game a decade ago.
Well yes, I was being unclear. I didn’t mean to imply that bankruptcy was some sort of catastrophe that would happen to befall them in the future. Rather that it is a choice that they are already laying the ground work for.
“indicating that the move would help Lockheed keep
prices downprofits rising.”“But if you do that then all the smart people will leave” -Dilbert
My father was in a downsizing company ’round the time that I graduated from college. He was running a research lab with a staff of nine, and the company wanted to downsize Dad’s staff by a third.
Dad didn’t like that one single bit. So he tendered his resignation.
Oh, boy, did that get the company in a lather. Because they didn’t want Dad to leave.
But he stuck to his guns and left the company.
In the years afterward, he’d say to me that the company was a shell of its former self. From what I heard from other sources, that was indeed the case.
Wow. First CISCO, then Lockheed. High paying jobs. Gone. I wonder how many of them just got a 30 year mortgage, believing their jobs will last as long as a mortgage?
Realtors Are Liars
Realtors are less than accurate
How banks are assaulting the housing market
Dennis Byrne
July 19, 2011
Here’s a real case known to me:
The death of a widower left his son with about a $500,000 mortgage that was “under water” (i.e. the loan was greater than the value of the home). The son put the home on the market for $329,000 and after some months received an offer to buy of $285,000. That would mean that the bank would take a loss, but at least the bad loan would be off its books, the buyer and the seller would be happy and the transaction would help the economy get a move on. Everyone waited and waited for the bank’s approval and finally, four months later, the bank said no dice. The deal was off. More months passed as the house sat empty with no offers. Several months later one finally arrived, but it was for $240,000. Again, the bank fiddled and fiddled until, five months later, it rejected the offer. Now, verbal offers of about $150,000 are showing up.
The son had done the best that he could to sell the home, but finally he had enough and notified the bank that the empty house was now its problem. Meanwhile, a slow, unnoticed drip, drip, drip leak in a second floor utility room collapsed the ceiling and ruined the floor below. The front door became so soaked that it couldn’t be fully closed and locked.
The house, unattended by an uninterested bank, was rotting away, and dragging down with it property values in this upper-middle-class neighborhood. I’ve tried, but have never received a sensible explanation for why a bank, through willful neglect, is willing to devalue its own assets to the point of worthlessness when it could have recovered at least some of its investment. Some people guess that it has something to do with accounting procedures that protect the quarterly bottom line.
For sure, this is but one anecdotal case, but my wife, Barbara, a real estate agent, reports that stories like this are ever more common. The warning signs abound: America’s housing stock is in danger of moldering. It would be nice if the banks would worry about that too.
http://www.chicagotribune.com/news/opinion/ct-oped-0719-byrne-20110719,0,5276134.column - 165k -
“Some people guess it has to do with accounting procedures that protect the quarterly bottom line.”
That’s my guess.
If a loss is realized on the books then the books take an immediate hit. If this accounting hit costs one his job then he will do whatever it takes to delay the hit.
The deterioriation of the house happens gradually but the financial hit happens all at once. Same with the bank employee’s job: He doesn’t lose his job gradually, he loses it all at once. He doesn’t lose his job as the house deteriorates, he loses it when the financial hit is taken.
So the name of the game as far as he is concerned is to delay the financial hit. The bank may suffer due to this delay but his concern isn’t about the health of the bank, his concern is about keeping his job for as long as he can.
BINGO. These poor accountants are hoping to keep the asset alive until they can move on to another department, and let the house fall in on the next guy’s watch. Similar stories probably abound in every other industry too: like academics stabbing each other in the back because of limited grant money; stopping development of new life-saving drugs because it would make a profit but not enough profit, so the chemist has to spend his expensive time on a me-too drug; a mortgage initiator signing a lousy loan which he knows will destroy a family but he has to do it to keep his own job; foreign companies deliberately making a greenhouse gas side product just so they can collect carbon credits when they STOP making the gas; LL’s raising rent and waiting for local government to respond with higher subsidies meanwhile screwing the tenents with real jobs; colleges accepting mediocre students but retaining them anyway and stringing them along just to extract two years of tuition payments before the kid finally flunks out … I can think of several others.
The past few days on HBB have been incredibly depressing. I’m watching my country (or the whole world) die of some disease (greed). Not because the disease can’t be treated, but because the doctors are arguing out in the hall about who’s going to treat it, which crony gets the contract for the medicine, and who’s going to pay.
You Want to Fix the U.S. Economy? Here’s a Start (July 19, 2011)
Charles Hugh Smith
A simple 8-point plan would restore both the banking and the real estate sectors, and end the political dominance of the parasitic “too big to fail” banks.
Craven politicos and clueless Federal Reserve economists are always bleating about how they want to fix the U.S. economy and restore “aggregate demand.” OK, here’s how to start:
1. Force all banks to mark all their assets to market at the end of each trading day, including all derivatives of all types, including over-the-counter instruments.
2. Allow citizens to discharge all mortgage and student loan debt in bankruptcy court, just like any other debt.
3. Banks must mark all their real estate to market weekly as defined by “last sales of nearby properties” adjusted for square footage and other quantifiable measures (i.e. like Zillow.com).
4. Require mortgage servicers and all owners of mortgage-backed securities to mark every asset within each pool to market weekly.
5. Any mortgage, loan or note which was fraudulently originated, packaged and sold, including the misrepresentation of risk, the manipulation of risk ratings, fraudulent documentation by any party, etc., will be discharged as uncollectable and the full value wiped off the books and title records without recourse by any of the parties.
If a bank fraudulently originated a mortgage and the buyer misrepresented material facts on the mortgage documents, then both parties lose all claim to the note and the underlying asset, the house, which reverts to the FDIC for liquidation, with the proceeds going towards creditors’ claims against the bank.
6. Any bank which misrepresents marked-to-market asset values will be fined $10 million per incident.
7. Any bank which is insolvent at the end of a trading day will be closed and taken over by the FDIC the following day, and liquidated in an orderly manner via open-market auctions of all assets, including REO (real estate owned).
8. All derivative positions held by the insolvent bank will be unwound immediately, and counterparties who fail to make good on their claims will also be closed, given to the FDIC and liquidated.
You know what this is, of course: a return to trustworthy, transparent accounting. And you know what the consequences would be, too: all five “too big to fail” banks would instantly be declared insolvent, and most of the other top-25 big banks would also be closed and liquidated.
At least $3 trillion in impaired residential mortgage debt would be written off, maybe more, and $1 trillion in impaired commercial real estate would also be written down. Derivative losses are unknown, but let’s estimate it’s at least $1 trillion and maybe much more.
If $5.8 trillion of fantasy “value” is wiped off the nation’s books, that’s only a 10% reduction in net household and non-profit assets, which total $58 trillion. Even an $11 trillion hit would only knock off 20%. If that’s reality, if that’s what the assets are really worth in the real world, then let’s get it over with. Once we’ve restored truthful accounting and stopped living a grand series of debilitating lies, then the path will finally be clear for renewed growth.
The net result would be the destruction of the political power of the “too big to fail” banks, the clearing of the nation’s bloated, diseased real estate market, and the restoration of trust in institutions which have been completely discredited.
Bank credit would flow again, and we could insist on a healthy competitive system of 250 small banks instead of a corrupting system of 5 insolvent parasitic monsters and 20 other bloated but equally insolvent financial parasites.
Those who lied would finally get fried. At long last, those who misprepresented income, risk, etc. would actually pay some price for their malfeasance. Criminal proceedings would be a nice icing on the cake, but simply ending the pretence of solvency would go a long way to restoring banking and real estate and ending regulatory capture by TBTF banks.
2. Allow citizens to discharge all mortgage and student loan debt in bankruptcy court, just like any other debt.
You already can discharge mortgage debt in bankruptcy court…just like any other debt.
all five “too big to fail” banks would instantly be declared insolvent, and most of the other top-25 big banks would also be closed and liquidated.
And how many jobs would be lost from all those bank branches? That’s the ONLY reason Obama bailed out GM — to save the jobs.
And the gov’t directly backs student loan debts - they’ve even cut out the middleman. Everyone with a brain would just graduate, declare bankruptcy, and be done with it.
The student loan middleman existed for less than 10 years. Bush set it up, and Obama took it out, as part of Obamacare.
Student loan debt was never an issue because a college degree used to mean an automatic job. Few defaulted on the loans, and higher ed helped out society, so covering the few loan defaults was a no-brainer.
And how many jobs would be lost from all those bank branches? That’s the ONLY reason Obama bailed out GM — to save the jobs.
But what good are jobs making stuff nobody wants? We really need workers to be productive in the sense that they are producing something desirable.
The past few days on HBB have been incredibly depressing
The more depressing it gets, the more enjoyable it is to read. Welcome to life in the ‘recovery-less recovery.’
America isn’t a country, it’s a game.
Yes Amerikah is SOS Stuck On Stupid…and i very tired of it.
The past few days on HBB have been incredibly depressing. I’m watching my country (or the whole world) die of some disease (greed).
“The consequences of low taxation and limited government are nothing short of catastrophic.”
Brazil’s success story provides valuable lessons
http://www.gadsdentimes.com/article/20110121/OPINION/110129939?p=2&tc=pg
…The most popular president in the Western Hemisphere — indeed, one of the most popular leaders in the world — left office Jan. 1 after orchestrating an economic success story that is the envy of the world.
Luiz Inacio Lula da Silva left office with an approval rating of 87 percent,…
…Brazil currently is experiencing record low unemployment, and its currency has more than doubled in value against the dollar.
Brazil now lends money to the International Monetary Fund. Did you catch that? Brazil is a creditor nation, not a debtor nation.
It’s important to keep that fact in mind as we discuss how Brazil achieved its current level of prosperity….
…Brazil has sharply reduced poverty in recent years. That wasn’t achieved through low taxes and limited government. It was achieved through massive social programs that have redistributed wealth and lifted some 20 million people out of poverty.
Did these programs bankrupt Brazil? Absolutely not. As mentioned earlier, Brazil is a creditor nation with record low unemployment. Is Brazil’s business community outraged at all this spending on social programs? The 87 percent approval rating suggests not….
…It’s important to note that Brazil, like most developed nations in the world, provides universal health care to all its citizens through general taxation. I’ll never forget the words of one conservative talk show host during the health care debate. He said health care reform would mean an end to prosperity in the U.S. Such hasn’t been the case in Brazil (or any other country, for that matter).
Brazil’s success shouldn’t be a surprise, given that long ago it cured its dependency on imported oil. Cars, trucks and other vehicles in Brazil don’t run on petroleum. They run on E-100 ethanol — 100 percent ethanol produced from sugar cane….
When the world runs out of oil, Brazil will keep on trucking.
In contrast, the United States chose to rely on tax incentives for free enterprise as a solution to the country’s energy needs. This incoherent, bumbling, stumbling approach hasn’t produced any credible replacement for gasoline, and we now find the economic “recovery” jeopardized by gas prices.
The lessons from Brazil and the lessons from the Great Recession are clear. Capitalism run amuck crashed the U.S. economy, thoroughly discrediting laissez-faire capitalism as a viable policy.
Brazil has demonstrated — as have other nations — that vigorous, proper and well-managed government regulation of the economy, including the provision of a robust social safety net and a national energy program, leads to general prosperity.
Our own history of the last 30 years or so teaches the opposite lesson. The consequences of low taxation and limited government are nothing short of catastrophic.
Rio, do you have any idea how incredibly frustrating it is to read about an example of the way things are/could be/ought to be that is REAL and NOW, yet I live in a place that has its collective head shoved so far up its own arse that it will likely never see the light?
Great. Now I’m even MORE depressed.
Yet another plug needed for Thomas Frank’s ‘What’s The Matter With Kansas’
Beware the soft landing.
Has Brazil’s economy peaked?
Tim Begany
Investopedia.com
Published Tuesday, Jul. 19, 2011 12:57PM EDT
Has Brazil’s economy peaked?
Tim Begany
Investopedia.com
Published Tuesday, Jul. 19, 2011 12:57PM EDT
Brazil’s economy grew 7.5 per cent last year, the fastest annual gain in nearly a quarter century and more than twice as fast as the U.S. economy, which expanded 2.8 per cent in 2010. In fact, Brazil’s economy has been growing so fast - about 5 per cent a year, on average - that some investors and economists are saying it has peaked and could be ready to backslide.
That would be quite an about-face, going from a top contender to a has-been in such a short period of time, but there are indications this is happening in Brazil right now. Here are five signs that, economically, Brazil may be on its way to becoming a country of the past.
1. Shrinking Gross Domestic Product (GDP)
GDP is an indicator of economic health representing the monetary value of all goods and services produced within a country during a specific time period, such as three months or a year. In Brazil, economists believe GDP growth is slowing and will fall to around 4.5 per cent or 5 per cent this year. That’s as much as a 40-per-cent drop from last year’s 7.5-per-cent GDP growth.
2. Worrisome Inflation
Inflation usually picks up as an economy heats up and expands because consumers want more of everything, from food and clothes to cars and houses. And that’s just what’s been happening in Brazil for more than a decade. There, inflation has gone from a record low of 1.65 per cent in 1998 to 6.7 per cent now - more than a 300-per-cent increase. Inflation can severely hinder economic growth when prices get so high that they discourage consumer spending, which is the main driver of growth.
3. Overdependence on Commodities
As a leading exporter of coffee, orange juice, sugar, soy, iron ore and other items, Brazil has been dubbed a “commodities powerhouse.” So how could that be bad? Some economists are concerned Brazil is overdependent on commodities and too weak in other areas, like industrial production. In the long term, that could result in a much slower overall economy even though Brazil does a tremendous amount of commodities business with the U.S., China and other countries. (To help you invest in commodities, read How To Invest In Commodities.)
4. Record-Low Unemployment
At a little over 6 per cent, unemployment in Brazil is near record lows and less than half the historic high of more than 13 per cent in August, 2003. Surely, low unemployment is a good thing, right? Not necessarily. Although just about everyone would rather have a job than be out of work, very low unemployment is a major sign an economy has peaked, particularly in the case of Brazil. At this point, excessive government hiring, not a bonafide need for more workers in the general economy, is the main reason for record-low joblessness in Brazil.
5. A Potential Housing Bubble
Brazil is starting to look like the U.S. a few years ago, right before the housing crisis that sent the U.S. economy into a tailspin. Property prices are soaring in Sao Paulo, which has seen home prices nearly double in only a few years. Also, credit has become much easier to obtain, with the amount issued to the private sector nearly doubling since 2007 - and set to grow another 20 per cent this year. Experts believe many new loans are being made to first-time borrowers who simply can’t afford them - just like in the U.S. before the big crash.
The Bottom Line
There are many signs Brazil is at the top of its game economically with only one way to go - down. The question is how quickly and how far it will fall. A major crash like the U.S. had a few years ago doesn’t seem likely because the Brazilian government saw what the United States went through and is already looking to curtail consumer credit. It has also been raising interest rates, a step governments often take to prevent a hot economy from overheating. Thus, a more likely scenario in Brazil is what economists call a soft landing, where the economy gradually pulls back to a more sustainable level of growth.
They may be looking to curtail credit but they are shutting the barn door after the horse is out. The banks there are charging up to 200% interest on their credit cards: http://finance.yahoo.com/news/Creditcard-debt-may-threaten-apf-3046211331.html?x=0
SAO PAULO (AP) — Silas Xavier pulls credit card bills from a pocket on the door of the taxi he drives, more from the glove box and still more from a pouch behind his seat, waving them as his voice rises in frustration and desperation.
Like many of the 40 million Brazilians who have joined the middle class since 2003, he got a taste for American-style consumption and dived headlong into the enticing world of easy credit, once available only to the wealthy.
He defaulted three times in four years. Now he’s in over his head again, struggling to provide for his wife and 4-year-old daughter.
Xavier is one more debtor adding to fears that the economic boom in Brazil may be partly built on a bubble in personal credit, even with interest rates on credit cards often topping 200 percent. Economists worry that if it pops, it could severely damage an economy that has come through the global downturn better than almost every other nation.
“The amount I owe keeps growing. I pay, but I can’t stop this snowballing of the debt. The interest each month is too high,” said Xavier, pointing to the latest credit card bill, showing he still owes $2,200. “I’ve tried to learn from hard experience how to better manage my debt, but I’m too far behind.”
Brazilian leaders have praised newly empowered consumers like Xavier as drivers of the nation’s economic rise. Their spending helped the country emerge from the global economic crisis at a time when people in other countries pulled back.
Now some economists fear those same consumers are being buried by sky-high lending rates. They worry that if debt erodes middle-class buying power, Brazil could face a recession.
“Brazil gorges on credit-card debt, and economists worry it could threaten nation’s boom”
How is this possible, didn’t the government stop them.
The globalists are using Brazil just like they are using all the other bubble countries. I heard they are thinking about moving their employment centers to South Sudan.
“He defaulted three times in four years.”
Hey man it could be worse, you could be 4 for 4.
“The amount I owe keeps growing. I pay, but I can’t stop this snowballing of the debt. The interest each month is too high,”
Xavier, what you need to do is get your hands on some of that redistributed wealth from the massive social programs that lifted some 20 million people out of poverty and pay those cards off. Fill that taxi up with E-100 ethanol and head on over to Bueno Buy and get that daughter of yours a new Flat screen.
Brazil will slow, ebb and flow as do all economies but its government mandated and achieved energy independence, universal health-care and millions brought out of poverty will remain. Even in a contraction Brazil will be contracting off a much higher level than it experienced 30 years ago. Now can the same be said for our USA? No? And why is that? Because America’s taxes on the rich are too high?
The fact is, the 30 year American experiment with trickle down, supply side, tax cutting for the rich and corporations failed. It failed. Face it even as you watch the big scramble up there to hide the pea and point fingers where they don’t belong.
On the other hand, a much poorer country, Brazil, has instituted nationalized health-care, a national energy program that has made Brazil energy independent and has created a growing economy and middle-class partly by redistributing wealth to the poorest of its people. Is some of this built on debt? Will Brazil face future recessions? Of course. Brazil is far from perfect (trust me) however Brazil’s debt and public programs have increased its middle-class by 35 million souls while America’s debt and supply-side economic system has reduced our middle class.
You must realize that Brazil’s success story scares the hell out of many on the right because Brazil is the perfect and current example that grossly unequal wealth redistribution, protectionism, nationalized energy and health programs and increased safety nets for its people can lead to economic results that are good for a whole people and not just the super rich.
I suggest those on the left learn more about Brazil and use its contrasting public policy examples and results when discussing supply-side economic issues with your Tea Party friends. (even if only to invoke their cliched babbling inanities)
Without knowing ALL the details, I’m surprised you didn’t point out at that now that 35 million souls have joined the middle class and presumably have better, higher paying jobs, they are paying higher taxes to help pay for it, something the lower-tax-on-the-wealthiest-among-us crowd thinks can only happen through lower taxes (on the wealthiest among us).
The only thing I could see ( and I am not a smart guy) is it seems like there is an over dependence on commodities and if and when interest rates rise it seems like that could be a problem. No?
But anyway getting to something really important.
How is the Unknown comic doing?
it seems like there is an over dependence on commodities and if and when interest rates rise it seems like that could be a problem. No?
Yes. This could be a big problem but I’m starting to wonder if there ever will be a long term commodity bust as there was in the past. Can supply continually keep up with or surpass demand in today’s growing world? Another problem is Brazil is starting to buy more consumer goods from China than they did even 3 years ago. As everywhere Brazil will face many future challenges.
How is the Unknown comic doing?
I saw the him briefly about two weeks ago bundled up like he was freezing. (But it was about 65 degrees and humid which is cold here) Next time I see him, I’m going to ask him more about the unknown comic thing.
I suggest those on the left learn more about Brazil
Sounds more like Brazil learned a few lessons from FDR and Scandinavia.
Believe me, the left has tried to arguments against supply side. For many years, the left fought against trickle down, and wanted to do universal health care. Carter tried to achieve energy independence (although I admit he could have chosen a nicer sweater).
But as Palmetto said, all the graphs and charts aren’t going to defeat the greed-driven psychopaths who already bought off the government and put stars in the eyes of the teabaggers. The money has won.
Carter tried to achieve energy independence (although I admit he could have chosen a nicer sweater).
I agree. I really liked President Ford’s ski sweaters.
And, when he’s not in DC boxy suit mode, I think that some of Obama’s outfits are pretty interesting. I especially liked the Indiana Jones hat from the first Mideast trip. And the Weatherproof jacket worn during the visit to the Great Wall.
OTOH, I don’t know who Bill Clinton’s tailor was, but the guy really looked sharp in a suit. Much more interesting palette of colors than what one usually sees on top U.S. government officials who are men.
And, from the small world department, I knew the lady who was Bill Clinton’s makeup artist. Yes, he had one. Just like all of his television-era predecessors, including Nixon. Same lady did his makeup too.
The money has won.
For now…
invoke
evoke
What?! What?! What?! You mean there’s a down side to “extend and pretend”?! I thought it was an infallible strategy, the product of our nation’s best minds?
If by “best minds” you mean the ones that were counting on a “V” shaped recovery, then extend and pretend might have worked (assuming the up side of the V was very, very steep).
Some of us have a different definition of “best minds.”
Why yes, that’s indeed what I meant. And the call is still for some form of “V” shaped recovery - even though to date the only letter that fits is “L”.
Be careful of the partial “H” recovery - following only the top of the left side to the bar in the middle and then down the bottom of the right side.
It’s a backslash recovery (\).
For sure, this is but one anecdotal case, but my wife, Barbara, a real estate agent, reports that stories like this are ever more common. The warning signs abound: America’s housing stock is in danger of moldering. It would be nice if the banks would worry about that too.
I can point to a half dozen cases within very easy walking distance of the Arizona Slim Ranch. Want to get on your bike and take a ride with me? I can show you dozens more.
This sounds like the house I bid on.
Started asking 1 mil
over 3 years dropped price to 595
I offerred 450 take it or leave it. Didn’t take the offer thank G, countered with 540.
Now its sitting there falling apart after another year on teh market. They dropped the price to 545.
My guess is that when all is said and done the house will be scrapped and sent to the junk yard.
wmbz
Thank you for this Lookheed post. That’s my CU, but I am not an employee. That’s a lot of mortgages at risk, possibly.
oops “Lockheed”!
I just got a call from Life Alert (during that post) that my Mother (Widow) was laying on the floor for a day at home. My sister under suspicion of no one answering the phone, went over to her home. She’s alive, and in the hospital. That’s one call no child wants to get. Everybody, have a great day.
Awaiting, my thoughts and prayers are with you. I well know how painful these things are with parents as they age.
Sorry to hear that. Having a 90 year old parent myself, I know how frightening that must be. Here’s hoping she has a swift and full recovery.
You are blessed to have a 90 year old parent. My mom died at 65 and my dad at 79. And their illnesses were preventable.
I hope everything turns out fine for your mother.
Sorry to hear that; be strong!
Yes, best wishes and prayers, Awaiting! Very trying situation, went through it with my dad ten years ago. Luckily your mother had a service like that - good move! Some (like a certain mom I know) are too stubborn to get Life Alert or even carry a cell phone.
Senior care is a huge issue that a society obessed with all things youthful is going to have a tough time grabbling with.
Thoughts and prayers are w/you and your Mom today Awaiting and for that matter every other hbber that wrestles w/this challenge.
Edgewater, w/the elderly set, is it youth they are clinging to or independence?
Hope she does well.
Good luck to you and your mom..
Best wishes to you, Awaiting.
Scumbag Realtor®
http://www.irrationaldiversions.com/stories/realtor
Just thought I’d better share with others here the alert I received on that link you posted….
My web security program gave the following alert on it:
….”found potential suspicious behavior on this site which may pose a security risk. Use with caution.”
You might want to update your brower.
Some food for thought…
This Simple Graph Explains Why Unemployment Refuses to Go Down
Here’s a short story with big implications. In May 2008, six months after the Great Recession set in, a typical family earning less than $90,000 a year spent $105 daily. One year later, in May 2009, they spent $59 a day.
Then in May 2010, they spent $59 a day. In May 2011, they also spent $59 a day.
http://www.theatlantic.com/business/archive/2011/07/this-simple-graph-explains-why-unemployment-refuses-to-go-down/242108/?source=patrick.net#thanksForSharingIframe
Slumps in consumer spending
http://www.nytimes.com/interactive/2011/07/15/sunday-review/consumer-spending.html?ref=sunday-review
And this slump in spending will continue to worsen as the boomers retire.
My brother came back from a Disneyworld vacation with his family and he had an interesting anecdote to share:
In addition to the usual fast food fare found in theme parks, mst Disney parks also have upper scaled dining, which is very pricey.
Summer of course is the busy time to visit Disneyworld and my brother said that the place was packed. What wasn’t packed were the restaurants, which really suprised him. So visitors who in the past might have dined at the Hibachi steakhouse in the Japanese pavilion at EPCOT were instead choosing to eat burgers and fries.
Anyway, I though this anecdote fit in with the whole “consumers spending less” trend. There are also rumors that the Disney Co wants to sell the Parks and Resorts division, with rumblings that it might be sold to Chinese investors.
And so it begins (or continues). That’s the next Profit Gimmick companies will use to feed the Bottomless Stockholder Maw. Sell of their less profitable* divisions to the Chinese. Hell, Jack Welch did that decades ago. Oh sure, Welch is “reviled” by the commoners, but what does he care? He’s filthy rich and he can buy all the yes-men he wants.
————-
*By less profitable, I mean they make a 10% profit instead of a 12% profit.
By less profitable, I mean they make a 10% profit instead of a 12% profit.
Exactly. Parks and Resorts are a cash cow, but there is little potential for growth. Disney’s been trying all sorts of gimmicks get more people into their parks and hotels: free dining plans, selling timeshares (Disney Vacation Club), Annual Pass Programs, etc.
My brother and his family are regulars at the World (I’ve only been there once). He says that the rule of thumb during summer was that you had to make dining reservations weeks, if not months in advance, if you wanted at table at one of the more upscale restaurants. Now there are tons of empty tables, which can’t bode well for Disney, who makes their real theme park money on hotels, dining and merchandise. Its becoming apparent that J6P is still taking the family to Disney, but they are staying at a non Disney hotel and eating fast food instead of fancier meals.
I live in FL, and, as a consequence, when people come to visit, they often want to go to Disney. After way too much time there, I’ve come to conclusion that Disney is “bubble priced”. There’s simply no way a median (or anywhere near median) family can (or should) afford a vacation that costs what Disney demands. Yes, you can do it less expensively (staying off campus, for example), but it’s still shockingly expensive.
Take the kids to Yellowstone. “Admission” will cost you about 100 bucks (for the year) and you’ll have a great time; actually seeing a natural wonder of the world instead of seeing a simulation of a make believe world.
But the kids want to see Mickey, not Smokey the Bear.
Or did you mean Yogi?
Disney has been having to discount heavily to bring them in. The biggest discount is the free dining plan: During select times of the year (which is most of the time now) stay at a Disney hotel and you eat for free at the upscale restaurants.
But you are right, it’s still expensive as hades. I suppose that if you stay off property at the Super 8 and not eat inside the parks (you are not allowed to bring food into the parks, so if you pack a lunch you’ll have to go back to your car to eat it) it could be doable on a budget.
“…actually seeing a natural wonder of the world instead of seeing a simulation of a make believe world.”
+1E6
A typical family earning less than how much? I think the typical family in the US earns like half that.
There was a link to Gallup within the Atlantic article that I thought was interesting.
http://www.gallup.com/poll/147863/consumer-spending-may-down-year-ago.aspx
Look, stop posting graphs and analyses and learned opinions, etc. It won’t do any good. There’s no logic, rhyme or reason when you have a bunch of psychopaths calling the shots and manipulating stuff.
Look, stop posting graphs and analyses and learned opinions, etc. It won’t do any good. There’s no logic, rhyme or reason when you have a bunch of psychopaths calling the shots and manipulating stuff.
+ eleventy billion
Sometimes rabble-rousing is the best medicine.
Joke Is on China as U.S.’s AAA Becomes Laughable:
By William Pesek Jul 19, 2011 - Bloomberg
Suddenly that $3 trillion of currency reserves looks like a bad idea.
Make that very bad for China, as investors display an obvious preference for yen over dollars. That the IOUs of a debt-ridden, aging, politically adrift nation smarting from a huge earthquake and nuclear crisis seem safer than U.S. Treasuries says it all.
Many investors still see China’s monster currency stash as a strength. They reason that China is fortified against financial Armageddon. In reality, China is trapped and struggling to find exits that don’t exist. Sell dollars for Greek debt? Right. Swap into Italian commercial paper? Perhaps not. Find enough spare Swiss francs to diversify into? Good luck.
There’s always Japan. Two immediate problems come to mind. One, 10-year bonds yield a piddling 1.06 percent, about a third of the return on comparable U.S. bonds. Two, with about 95 percent of Japan’s debt outstanding tucked under tatami mats at home, China couldn’t get its hands on enough to make the exercise worthwhile. Bond markets elsewhere in Asia are either too small or too illiquid to help.
As 2011 unfolds, the Bretton Woods II architecture that Asia created after the 1997 crisis isn’t just crumbling — it’s putting trillions of dollars of state wealth at risk. Romantic notions about returning to the original Bretton Woods world of the gold standard are unrealistic in a global system as leveraged and nontransparent as ours. So is saving its successor, which saw Asia establishing de facto pegs to the dollar and amassing mountains of reserves to protect them.
China’s Got Game
No one played that game with greater skill and alacrity than China. An undervalued yuan is the glue that powers the world’s No. 2 economy. But it’s getting harder to keep it up as Federal Reserve Chairman Ben S. Bernanke flirts with another round of quantitative easing, or QE3, and Treasury Secretary Timothy Geithner borrows to the hilt.
What’s more, it’s getting more expensive by the day. Nothing makes that clearer than recent warnings by Standard & Poor’s and Moody’s Investors Service. Both are considering yanking the U.S.’s AAA rating. It’s great to see S&P and Moody’s not only showing some spine, but also being out in front of the U.S.’s deteriorating fiscal condition.
The idea that any economy deserves a top rating today is just laughable. More and more, Chinese officials are realizing the joke is on them. The $1.2 trillion in U.S Treasuries held by China is but one part of the punch line. The other is the enthusiasm with which China has been buying debt issued by Greece, Portugal and other weak euro links.
These $3 billion of currency reserves are real claims on real assets.
In a world that suffers from a shortage of cash whomever has cash gets to make the buys and they get to set the prices.
Yes, but that three trillion claim on assets can be reduced in a key stroke. You might have the same amount of dollars but if we keep printing money that three trillion might just buy a billion dollars of today’s goods. Hyperinflation makes paper money worthless in a hurry but even run of the mill high inflation (10%) can reduce the buying power of money in half in just seven years.
Exactly, which is why finance ministers around the world froth at the mouth when a new QE is announced.
Smashing through the “zero bound” like the Kool-Aid mascot.
I’m hot…and thirsty.
They don’t have cash. They have IOUs. That’s what defaults are for. OMG, I think there might be another world war.
China knows that a lot of their jobs came from lending money to America. The real winner is probably India. They got lots of jobs but didn’t have to pay for them by buying Treasuries. However, India has its own issues…
“However, India has its own issues…”
Which ones in particular? Because I noticed there’s a little story today where Hillary Clinton is urging India to step up to the plate and challenge China. From a foreign policy standpoint, this little move, combined with Obama’s recent confab with the Dalai Lama, looks like diplomatic smoke signals to me. In other words, China is being sent a message or two, but I’m not really sure what the messages are.
I was being slightly facetious, but I was referring to creaky infrastructure, overpopulation, overdependence on American markets, and Pakistan.
Could post a link to the article? What is the challenge that Hillary wants India to mount? Buying Treasuries? Finding their own markets? Child labor laws?
Interesting, no?
http://www.bloomberg.com/news/2011-07-20/clinton-tells-india-it-s-time-to-lead-in-asia-pacific-1-.html
The two interesting things that I’ve heard over the past couple of years are:
1. Wage inflation. Due to the shallowness of the talent pool, wages are rising quickly, and thus the profits for companies that are facilitating the offshoring are shrinking, as the cost savings for foreign companies shrinks…in part because:
2. Corruption. Unlike China, where if you find the right person, you can bribe one person, and you are done…India requires that you bribe lots of people, making the cost to do business as an outsider higher.
And I’m not touching poverty, caste system, etc.
There is no place in the world that is perfect…everywhere has its issues. India is going to be a massive source of growth, but one of their sources of growth (offshoring to India), is not endless.
Issues?
1. Too many people
2. Too many uneducated people
3. Too many corrupt people
4. Too many people unwilling to work at global levels of productivity
5. Too little land in comparison with 1.
6. Not much year-round water, and less groundwater by the day
7. Environmental degradation forced by global warming
8. Few local energy sources, enormous dependence on inputs
9. Piss poor infrastructure
10. Populist governments that would rather hand something out for free than charge a decent fee and invest proceeds in improving said good/service
11. Terrorism from across the border
Dude, I was reading from the bottom up, and I thought you were talking about the USA, not India.
However, India has its own issues…
Like a barely developed infrastructure. As in, try driving across India. Much of your trip will happen on glorified goat trails.
Then there’s government inefficiency and corruption. We complain a lot about these things, but the Indian government reaches levels that our U.S. government has yet to reach.
Last, but not least, there’s the caste system. Nothing like rigid social stratification when it comes to ossifying your society.
Actually you can drive across the country on pretty ok roads, but if you want to go anywhere not on the main highways then God help you.
As for caste system, I think you’re blowing it out of proportion. Still a huge force in rural, feudal parts of the country. But if you ask a local they will point out how the whole system has been perverted to become a numbers game for government handouts. For the type of industries at the global level (manufacturing, services) caste is a non-issue.
The Indians I have worked with were all very caste aware. To the point of not going to eat Indian restaurants owned by certain Indians.
They still pay dowries as well.
The Indians I have worked with were all very caste aware. To the point of not going to eat Indian restaurants owned by certain Indians.
And to think that Yours Truly will just trundle into Gandhi, Sher-E Punjab, or any other Indian restaurant and…
…it’s all good.
BTW, Sher-E Punjab’s within easy walking distance of the Arizona Slim Ranch. I like that in a restaurant.
I read somewhere that India chose to deliberately build up only ONE kind of physical infrastructure: communications and computers. They have really good phone lines and computers, but don’t try to drive and for the love of sacred cows don’t get on a ferry.
And I *suspect* that their education system is the same way. It’s all about the computer programming, and skilled clerical like medical record-keeping or simple tax accounting.
And I *suspect* that their education system is the same way. It’s all about the computer programming, and skilled clerical like medical record-keeping or simple tax accounting.
It’s a very rote learning-based system. Which turns out graduates who have a very hard time outside of rote-based work.
I’ve spent a lot of time in India and the one thing you
don’t do is drive, or go through town with the window
down. Cars don’t have side mirrors, or if they come
that way new, they’re either folder flat or taken off the
doors. If you don’t, the get smashed when passed.
I always hired a car and driver for my trips. In the long
run cheaper, faster, and much safer.
Another thing, you never make eye contact with the beggars. If you do, you or the car is immediately
surrounded by 20 -30 people begging for cash.
IIRC, in the nineteenth century a young and growing America got the shaft from many a European investment scheme and credit crisis. So, the Chinese ought to chalk up their coming trials as “growing pains”.
The only problem is that interest rates have been falling. THere are still many who think that interest rates will continue to fall.
They have leveraged their position to acquire great manufacturing and technologic capabilities.
Cyprus may need bailout after blast, banker warns
By MENELAOS HADJICOSTIS The Associated Press
Posted: 9:18 a.m. Wednesday, July 20, 2011
NICOSIA, Cyprus — A deadly explosion that shut down Cyprus’ major power plant and spawned a week of rolling blackouts has wreaked such damage to the economy that it may need to be bailed out, the country’s top banker has warned.
The government should enact more austerity measures to deal with an escalating crisis that has seen homes, businesses and government offices go without air conditioning in mid-summer, when temperatures often hit 100 degrees (37 centigrade), central bank governor Athanasios Orphanides.
“I believe that the economy is now at a state of emergency, comparable to that of 1974,” Orphanides said in a July 18 letter to President Dimitris Christofias, which was obtained by The Associated Press on Wednesday.
Bailouts are the new black.
A Tumbler of Real Estate Agent Headshots:
http://estateagents.tumblr.com/
They will haunt your nightmares.
(Also, they are hilarious. Would you buy a “service” of any sort from these people?)
Many of the real-a-tors around our area (S.C.) have their pic taken while talking on their cell phone. You can just tell they are in the middle of a really big deal.
Brilliant!! Thanks for sharing!
I would never allow any of those pictured to “service” me, much less deliver them a 3% commission!
If we made you King or Queen of the United States for a day how would you fix the present impasse on the debt ceiling?
It’s a hard question. The Administration and Congress can’t come up with a solution anybody likes.
Yesterday, the House of Representatives passed a measure that’s going nowhere. People want this to be ended and appear resigned to the fact it’s going to cost them…in higher taxes and diminished services.
The main concern of the politicians is to reach a solution that won’t jeopardize their re-election chances in November, 2012.
The plan by “The Gang of Six” is said to have the inside track at the moment. It would cut deficits by $3.7 trillion over ten years. But older people are put off by the plan to trim Social Security COLAS, cut back on Medicare/Medicaid, and scale back tax breaks.
The Senate’s “Plan B” would let the President raise the debt ceiling by $2.4 trillion provided he promises off-setting spending cuts. This might patch things over until after the election.
“Cap, Cut, and Balance” has gained some momentum. It would cut spending by $2.4 trillion, apply a cap to spending, and call for a Constitutional requirement for a balanced annual budget. Not many experts think it has a chance.
The “Big Bargain” scheme offered by President Obama would cut deficits by $4 trillion over ten years, slow spending, and raise revenue by eliminating tax cuts - thus bringing in an extra trillion dollars. This plan seems to have fizzled.
So, there you are, Your Highness! Which plan would you ordain were you to be King/Queen for a day?
There’s another unlikely option. Keep the debt ceiling right where it is. In order to make a stab at paying some of the bills coming due in August Congress would have to divert large amounts of money from less necessary programs to avoid debt default. This would be enormously painful, but running into un-payable debt always is. Some federal agencies might have to be closed down entirely. Federally owned assets might have to go on the auction block, including some of the considerable stash of gold bullion at Fort Knox. There might even be a call for cash from the people through the offer of special emergency bonds, much like the War Bonds of the 1940s.
And there is our national ego to consider. The world’s “most powerful nation” cannot default on its debt. It just wouldn’t be, well…seemly. So I’m guessing we’ll see some action by week’s end involving promises…promises to cut back on some spending, promises to raise taxes (on the rich) and an immediate increase of the national debt ceiling by at least $2 trillion. (Gotta get by that 2012 election!)
“2012 election!”
Panetta or Petraeus? You decide! Maybe there’ll be one of those “power sharing” thingies.
The gang of six plan is a good start and probably the only one that can politically pass. Of course, you said I could be King but I am not sure if that means a constitutional monarch or the old fashion dictator type monarch. I will go with dictator. So beyond the first step, we need to return to some type of gold standard and either abolish or greatly reduce the power of the Fed. We never would have let our industrial base stagnate if we had to allow an outflow of gold to pay for imports. The manipulation of interest rates to encourage borrowing and consumption was only possible with a Fed which had the unlimited ability to create money. We need to move to a federal government that operates within the confines of the constitution which will be very painful. States before the 1930’s had the sole responsibility to provide or not provide transfer payments. The natural check on that was without the ability to print money they had to live within their means. How we restructure social security and medicare to be constitutional as was understood prior to the 1930’s is a real problem. However, relying on the commerce clause to allow just about any program the federal government wants to create is the bigger problem. The top 2% could pay all the taxes necessary to run a limited constitutional government but our present government is too big to fund in the long term.
““Cap, Cut, and Balance” has gained some momentum. It would cut spending by $2.4 trillion, apply a cap to spending, and call for a Constitutional requirement for a balanced annual budget. Not many experts think it has a chance.”
Actually no expert thinks it has a chance and its momentum is entirely limited to getting a “look I voted for the most cuts I could” vote in the House. After that it will never even be brought up for a vote in the Sentate. And if for some incredibly odd reason it did (would have to involve someone re-wiring vote buttons on the Dems to reverse the results, though I’m not sure the Senate uses vote buttons), the president would veto it.
That isn’t momentum. It is grandstanding. And the members are certainly allowed to do that. No reason they shouldn’t. Politics has a lot of grandstanding in it. But it isn’t the same thing as momentum in this town.
According to the poll on CNN, it has lost 50% of its popularity since the details came out.
I would….
1) Slash spending
Defense: 50%, focused at new weapons that don’t involve people in boots on the ground. No new aricraft carriers, no new subs, no new joint strike fighter…
Social Security: 20%. Make it a flat payout instead of pretending the payback is based on how much you paid in. Do not phase in the 20% cut over 20 years by making COLA’s be 1% under inflation… 20% cut today.
Medicare/Mediciad: Non-profit health funds with true death panels approving treatments and collective bargining for drug prices. Cut the proifts of the drug companies and eliminate the private health insurance companies.
2) Raise taxes:
Eliminate the Social Security as a separate tax. Make one progressive tax based on brackets the size of the median income. If median wage is $40K, then you pay x% on the first $40K, 2x% on the next $40K, 3x% on the next $40K, etc. etc. etc. 2x the amount for married filing joint. X is whatever it needs to be for the year to match expected spending. No deductions.
All income, regardless of source is just income… Wages, capital gains, inheritance (above a reasonible lifetime annual gift limit, and if it is put into an annuity that pays over time, then the annuity payments are income), etc. etc. etc.
I like most of what you have, Darrell. I’m a little leery of a flat-payout Social Security, because, what is that flat number going to be? Cost of living will depend on locale, climate, household stats, and the like. Then again, you could cut the line at $20K and force people into the Oil City plan in low-cost states. Maybe some sort of SS range based on what you paid in…
What are your ideas for the corporate side of things?
If you live somewhere that is too expensive, then mayby you need to move somewhere less expensive. If you made more, maybe you should have saved more.
What would the pay out be? I’m thinking 40×52xminimum wage. Basically, the same as a full-time, minimum wage job. But remember, I’d also be covering 100% of medical for anything that made it past the death panel, so there is no out of pocket at all for medical.
I really like some of your ideas there, darrell.
If the minimum wage is supposed to be something that the young & unskilled can survive on, then asking seniors to survive on it does not seem that unreasonable. And vice-versa, if we are going to ask seniors to survive on $x, then the young minimum-wage earne cannot really complain that $x should be lower, since
Your structure would do away with a fair bit of the generational warfare inherent in the current system; both seniors and youngsters would be in favor of increasing the “minimum wage”/”maximum payout”.
I would point out that your very-progressive tax rate might well result in a 100% tax rate for some very-high-income folks…
U.S. to Close 800 Computer Data Centers
STEVE LOHR -Blueridgenow.com -July 20, 2011
The federal government plans to shut 40 percent of its computer centers over the next four years to reduce its hefty technology budget and modernize the way it uses computers to manage data and provide services to citizens.
Computer centers typically do not employ many people to tend the machines, but analysts estimate that tens of thousands of jobs will most likely be eliminated.
The federal government is the largest buyer of information technology in the world, spending about $80 billion a year. The Obama administration, in plans detailed Wednesday, is taking aim at some of that by closing 800 of its sprawling collection of 2,000 data centers. The savings, analysts say, will translate into billions of dollars a year and acres of freed-up real estate.
The government is following the lead of private business. For years, companies have been using software that shares computing tasks across several machines in a data center. The task-juggling technology enables computers to run at far higher levels of efficiency and utilization than in the past, doing more computing chores with fewer computers and fewer data centers.
Computer centers typically do not employ many people to tend the machines, but analysts estimate that tens of thousands of jobs will most likely be eliminated.
The current trend is “lights out centers” that are completely unstaffed. The only time anyone sets foot in one is when there is a problem, and it’s usually a contractor.
Actually, I think they are talking about cloud computing. The Fed is outsourcing much of it’s compute to companies like Rackspace, Verizon, etc. It’s kind of like outsourced computerized labor. It saves them tons of money because they are so grossly inefficient at doing anything; just having someone do it for them cuts the costs dramatically.
These thoughts are a move in the right direction, IMO.
Today’s playgrounds may be too safe, critics warn
Eliminating towering monkey bars, tall slides may be safer, but it can keep kids from conquering fears - The New York Times
When seesaws and tall slides and other perils were disappearing from New York’s playgrounds, Henry Stern drew a line in the sandbox. As the city’s parks commissioner in the 1990s, he issued an edict concerning the 10-foot-high jungle gym near his childhood home in northern Manhattan.
“I grew up on the monkey bars in Fort Tryon Park, and I never forgot how good it felt to get to the top of them,” Mr. Stern said. “I didn’t want to see that playground bowdlerized. I said that as long as I was parks commissioner, those monkey bars were going to stay.”
His philosophy seemed reactionary at the time, but today it’s shared by some researchers who question the value of safety-first playgrounds. Even if children do suffer fewer physical injuries — and the evidence for that is debatable — the critics say that these playgrounds may stunt emotional development, leaving children with anxieties and fears that are ultimately worse than a broken bone.
“Children need to encounter risks and overcome fears on the playground,” said Ellen Sandseter, a professor of psychologyat Queen Maud University in Norway. “I think monkey bars and tall slides are great. As playgrounds become more and more boring, these are some of the few features that still can give children thrilling experiences with heights and high speed.”
After observing children on playgrounds in Norway, England and Australia, Dr. Sandseter identified six categories of risky play: exploring heights, experiencing high speed, handling dangerous tools, being near dangerous elements (like water or fire), rough-and-tumble play (like wrestling), and wandering alone away from adult supervision. The most common is climbing heights.
“Climbing equipment needs to be high enough, or else it will be too boring in the long run,” Dr. Sandseter said. “Children approach thrills and risks in a progressive manner, and very few children would try to climb to the highest point for the first time they climb. The best thing is to let children encounter these challenges from an early age, and they will then progressively learn to master them through their play over the years.”
Bah, they’ll face plenty of risks in the work/finanical world. Monkey bars? Wait until they have to get by juggling five credit cards while living paycheck to paycheck - now that’s risk!
Growing up, did anyone have one of the those towering rocket ships at their local playground? Ours was like three stories tall, one could easily see over the surrounding houses.
Growing up, did anyone have one of the those towering rocket ships at their local playground?
Oh yes! Those were soooo cool!
I liked to swing really, really high on the swings. As in, can I swing over the top and do a loop?
I had friends who darn near did so. But I was too slender to accomplish this feat.
I think mythbusters did one on that. As I recall, they had to use rocket motors to make it actually work.
Compton Cuts 30 Percent Of Workers In New Budget
COMPTON (CBS) — The Compton City Council has diverted a potential government shutdown by approving a budget Tuesday night that calls for massive layoffs.
The new budget would require the city to slash 30 percent of its workforce.
Compton officials have been struggling with how to deal with a $25 million deficit and avoid a government shutdown.
The Council has twice voted down a proposed budget that would lay off 90 workers, including some department heads.
The city treasurer made a point of saying this week that he wouldn’t issue paychecks until the Council approved a budget.
Unions representing city employees have threatened to sue if a budget plan calling for layoffs was passed.
And Matt Drudge thinks this is news-worthy because …?
Unions = goons and thugs, right
Look I know you have some sort of thing for Drudge, you must visit his page a lot? Not all news links come for there, you may be interested to know that.This one happened to come through the LA Times and local CBS. However please stay on the same track you are on, it fits you very well.
I read Drudge and loony left sources like the UK Guardian and Counterpunch.
Matt Drudge picks some interesting stories, but he has a rightward bias in his selection of what he promotes as ‘news.’
A few years back about half of links were to Breitbart links of stories also reported on Reuters, AP, et cetera.
If you went broke but had a little stash of gold at the bottom of your sock drawer, might you not be tempted to take some of that gold to the pawn shop or coin dealer and convert it to paper currency?
The federal government is broke, but is sitting on trillions of dollars in assets - including the gold bullion it “called in” back in 1933. It could pay some bills if it sold some of it.
There’s been speculation lately that the government might do the reverse. Instead of selling its gold it might require private citizens to turn in their holdings to the U.S. Treasury. For instance:
“Silver is cosmetically much cheaper than gold, and if the whole monetary system breaks down, gold is likely to be confiscated to back up a new monetary system and silver would become the safe haven of choice investors could still freely invest in.” ~Gijsbert Groenewegen, a managing partner at Silver Arrow Capital Management Gold/Silver Ratio
- This is nonsense.. Mr. Groenewegen is talking entirely through his hat! The government did not “confiscate” the gold without compensation in 1933. It paid the going mint rate of $20.67 for every ounce. It paid in paper Federal Reserve notes and silver coins. Imagine Congress paying $1,600.00 per ounce for private gold today!!
Were the U.S. to return to a Constitutional money standard it would not “confiscate” physical gold from the people. It would, instead, declare the U.S. dollar to be a certain weight of gold…say 1/2000th of a troy ounce….and people would no longer have to hide their gold coins in sock drawers or under mattresses. They could deposit their Krugerrand in a bank and see their account credited with $2,000.00. They’d conduct business as usual with paper currency, except the paper would be redeemable whenever they wished. Want a Krugerrand, Maple Leaf, or U.S. Gold Eagle to carry in your pocket or offer as a gift? Take $2,000.00 in paper currency into a bank and get one!
Remember; Uncle Sam has no more claim on your gold coin than he does your wrist watch. (That is, under the present system of government. Come a dictatorship run by the military and the rules of the game will change.)
‘The federal government is broke, but is sitting on trillions of dollars in assets - including the gold bullion it “called in” back in 1933. It could pay some bills if it sold some of it.’
If I were the federal government with a 1933 precedent for ‘calling in’ gold, I’d be tempted to repeat the act.
Imagine Congress paying $1,600.00 per ounce for private gold today!!
I can imagine this very well Government takes in gold at 1600 paper dollars per 1OZ of Gold. After all or most Gold is confiscated the price goes to 5000 an Oz or in other words the paper dollar falls to 5000 dollars to 1 OZ of Gold
good way for the government to make money trading bad money for good money
they did this before
I’ve heard lots of stories about people hiding gold coins in paint cans in the basement during the depression.
And… if everyone tried to redeem their paper for gold at the sime time, there would not be enough gold…. As happened over and over and over and over in the “gold standard” era.
The amount of gold is relatively fixed, even as the population and productivity of humans skyrocket. We need a money supply that can grow with us, not one based on medieval conecpt of barter in a fixed quantity asset like gold.
Existing-home sales fall 0.8% to seven-month low
http://www.marketwatch.com/story/existing-home-sales-fall-08-to-seven-month-low-2011-07-20
No worries we’ll get it cranked back up during the”fall buying” season! That’s when all the really savvy buyers come out and start snapping up deals left & right.
Still expecting U.S. used home sales transactions (but not prices) to bottom out in 2011…
That doesn’t make sense Stucco. Transactions are necessary to reach the price bottom and we’re a long way from that yet.
PS- Good one WMBZ
~Realtors Are Liars®
Interesting that the median existing home price went up by 0.8% from 2010. Must be that the number of distressed sales dropped as a percentage of all the sales. Not sure what to make of that.
Might be an indication that the bottom feeders we’ve seen to date are not true bottom feeders. Mr. Market busy extracting the last dollars all the way down.
From MarketWatch: the 10 most walkable U.S. cities
1) New York
Miami
2) San Francisco
3) Boston
4) Chicago
5) Philadelphia
6) Seattle
7) Washington DC
9) Minneapolis
10) Oakland
Least walkable:
1) Jacksonville
Kansas City
2) Charlotte
3) Oklahoma City
4) Fort Worth
5) Nashville
6) Indianapolis
7) El Paso
9) Memphis
10) Louisville
Chicago, Philly, Oakland and Miami may be considered “walkable”, to the degree that they have sidewalks or shoulders, but given the recent flash-mob action, I dunno about walking in any of these cities.
I’m surprised Tampa isn’t on the least walkable list.
Interesting that the least walkable cities are mostly in the south, which has the highest obesity rates in the country.
and the most wakable are also the most dangerous to walk thru
http://endoftheamericandream.com/archives/how-globalism-has-destroyed-our-jobs-businesses-and-national-wealth-in-10-easy-steps
The article above is pretty good.
“Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost”
Some of those ‘union goon’ wages paid for my friends to be the first in their families to attend college.
I think the only solution to the pigmen’s insatiable greed may be a massive bloodletting. And Marie Antoinette didn’t get it either…
I love how people say that unions are no longer needed.
Anecdote:
My dad is retired in Mexico and lives off of his US and Mexican Social Security. A couple of years ago he needed some shoulder surgery, so he went to my brother’s in North Carolina and had it done there (using Medicare).
Anyway, while there he noticed that my brother was putting in 60-70 hour work weeks at the office. My dad (who hasn’t worked in the US for 30+ years) was taken aback by that, and when my brother said it was the new normal to work tons of unpaid overtime my dad was shocked.
The other day, there was an article on CNN showing that unemployment in Mexico is only 5%. It’s 9.2% here.
It wouldn’t be 5% if every illegal was deported.
The Mexodus didn’t happen by accident. The Mexican gov’t even published booklets with tips on how safely cross the border.
Booklets? Jimminy Cricket.
The Mexodus didn’t happen by accident. The Mexican gov’t even published booklets with tips on how safely cross the border.
ISTR reading an NYT article that showed the contents of said booklet.
@In Colorado
I read an interesting article that noted that historically, there was both a “push” and a “pull” that was the driver for immigration into the US from Mexico (illegal and otherwise). They now note that because of:
1. Higher costs to get smuggled into the states; and
2. More opportunity in Mexico,
There is less of a “push” with the younger generations in Mexico. Let’s see if the numbers play themselves out over the coming years.
There is less of a “push” with the younger generations in Mexico. Let’s see if the numbers play themselves out over the coming years.
About a decade ago, I was chatting with a neighbor from Nogales. (He was born and raised on the U.S. side of the border and is of Mexican descent.) I predicted that it wouldn’t be too long before Mexico became a net importer of labor.
Also 3: Fewer opportunities in the US.
Bear in mind that not all illegals work as busboys or landscapers.
I have an aunt, who has degrees in psychology, who overstayed her tourist visa years ago. She works as a counselor in some Bay Area school district and earns about 100K. Of course looking at her or listening to her you’d never know she’s an illegal.
And this paper is pretty good:
http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366
I like this one too, although he does make the mistake of blaming it all on “the left”. I guess he hasn’t figured out that globalism has infiltrated the entire political spectrum — Basically anyone with space left in their pocket book to receive bribe money.
http://www.thenewamerican.com/culture/education/7264-groomed-for-globalism
I’m not sure I’d call this “leftist” in the liberal sense.
To a Professor from Pakistan, “citizen of the world” means “You Americans need to give us your money.”
and warn that soon higher-paying jobs may follow low-paying jobs in leaving the United States
Paul Craig Roberts has been sounding the alarm about this for years.
Big V ,this article is a great summary of the major problems . The Power Brokers tried to use debt to fill the gaps .
Than when you add price fixing health care Monopolies to the mix along with all the other price factors that don’t represent real capitalism ,than
its a train that we are on that is doomed to fail .
What Country would give away their tax and job base so Multi-National Companies and Middle men could make more money and renege on their obligations along with everything else .In the meantime the American
taxpayers is suppose to continue to grant these greed seeking entities
tax breaks and bail outs as if they can even be considered American Companies anymore or that they create any good for American Citizens
Who ever said that it was a right of a American Company to seek profits to the point of being traitors to the long term structures of America and economic balance and tax base . When you see these
Entities using the USA government as if they were Pawns for their
vision of a grand World playground for greater profits ,its alarming .
The Politicians never talk about how Globalism screwed up the American system and economy and how Wall Street sought to
increase profits by their contrived casinos games and mis-allocation of funds and faulty lending for quick profit . Can’t people see where all the money is going while the Majority suffers ? It’s crazy .
Yes, I think people can see it. It’s all coming to a head now, isn’t it?
People can’t see it.
How many here who are middle class support more/continued tax breaks for elite and corporate America, the further weakening of labor, trickle down economics, deregulation, free trade etc etc.
Both parties are on teh side of the elite, but one party has convinced it’s voters that making the rich more powerfull and wealthy will improve the life of Americans and the power of America. The other party just lies to it’s voters and says we couldn’t do anything about it.
The first reported Social Security payment was to Ernest Ackerman, who retired only one day after Social Security began. Five cents were withheld from his pay during that period, and he received a lump-sum payout of seventeen cents from Social Security.[25]
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.[26]
In 1940, benefits paid totaled $35 million. These rose to $961 million in 1950, $11.2 billion in 1960, $31.9 billion in 1970, $120.5 billion in 1980, and $247.8 billion in 1990 (all figures in nominal dollars, not adjusted for inflation). In 2004, $492 billion of benefits were paid to 47.5 million beneficiaries.[30] In 2009, nearly 51 million Americans received $650 billion in Social Security benefits.
http://en.wikipedia.org/wiki/Social_Security_(United_States) - 334k -
My father who is 82 started receiving SS checks when he was 70. He was returned what he had paid in, in 6 years time. Early “contributors” paid in little and got most of it back in a hurry. It’s a touchy subject, but a fact none the less, a whole lot of people are living out of other peoples pockets.
I know a women who is 98, her husband died in 1965. She has been receiving his SS benefits since that time. Do I begrudge her for expecting something that she did not directly contribute to? No, however someone else has to pay for it.There may be just crumbs left for a lot of young folks coming along. As we head forward into an unsustainable system.
But you can’t say anything negative about SS or you are deemed heartless and evil.
P.S. Our present system was set based on people dying off far earlier than they are now, so the plan was NOT to have to pay them for very long.
Plus they paid in a much smaller percentage of their income back then. Had they paid what we are paying now they wouldn’t get it all back so fast.
Correct, but what about people who are well off and don’t need SS? I know a whole bunch of old folks who’s life would not be effected in the least without SS. They got theirs back long ago, but still keep taking the checks.
What about the very wealthy? I know a fellow up north who is retired and is worth in the neighborhood of $20 million dollars. He still keeps taking his check, got it all back years ago.
The 98 year old women I know, her husband was a prominent Dr. he left her set for life, she never had one job. She lives in the most expensive retirement home in Columbia, S.C. yet she has been getting his check since 1966.
Point is there is a ton of waste in the SS system that should addressed, but as soon as you mention it the howls crank up. I worked all my life it’s my money and I deserve it! Fine but what about after you got it all back?
It is a Ponzi scheme pure and simple designed decades ago on a different model. It will not, can not continue in it’s present form. Yet you can not even talk about it. So screw the up and coming. Politician’s are scared to death of the subject, it may cost them votes. Ain’t America great!
Not that this answers your particular examples but because of inflation most everyone ends up taking more than they paid in. But is inflation their fault? If the cost of healthcare was now still what it was when they paid in would the insolvency problem be as horrible as it is?
The collateral damage of inflation needs to be put on the shoulders of those who decided to take that route: those in charge of the money supply past and present
The larger problem is the baby bust.
Social Security, as it was fouled up to be in 1939, required every generation have 1.5x as many people as the prior. Of course, it allso required that rates double about once a decade or so.
The Baby Bust, along with rates reaching 15+% and not being able to continue to double, is the death of Social Security as it has existed. Instead of 1.5x as many GenX as Boomers, there are only .8x as many.
It doesn’t matter how many kids there are if they don’t have jobs.
I do not believe that SS $ were ever invested at the market rate. Instead, they were temporarily, sequentially, perennially loaned to the General Fund at far below market rates. Thus the “underfunding” exhibited now.
Do the same math on Medicare, and it is very similar. People pay in about $0.50 of every dollar that they spend.
And how much is 50 cents invested in Tbills 30 years ago worth today?
I believe the $0.50 was inflation adjusted, so it wouldn’t be a perfect apples to apples comparison. The nominal numbers are worse. In any event, you can’t just calculate $0.50 grown at Treasury yields for 30 years, since only a small fraction of $0.50 could earn for 30 years, some will earn a return for only 1 year, and some might have earned a return for 40 years.
In any event, I took a look back, and the $0.50 is too high, the number is smaller. From an article I dug up:
“As an example of the problem, according to the Associated Press, the average wage couple jointly earned $89,000 annually in 2010. Upon attaining eligibility for Medicare and retirement in 2011, they would have paid in $114,000 in Medicare payroll taxes total. But their expected average medical services, including prescriptions are expected to cost $355,000, about three times what they paid in.”
The number was 33%, and that 33% was wage inflation adjusted. I’m not sure if the $355,000 was a present value, or the future value of services…for my analysis, I’m assuming it’s a future value (to benefit the argument that people have paid in enough).
Their math assumes the person earned 89,000 per year for about 45 years straight (paying in 2.9% per year), so they are already growing the payments at the rate of wage inflation (since the couple probably didn’t earn $89k 45 years ago). If they didn’t inflate the number by wage inflation, and assumed that wages grew by a paltry 2% annually to max out at $89k at 65, they would have only paid in $77k nominally, not $114k.
So, the value of their contributions grown by wage inflation over the period of 45 years (that included some good years for workers) probably isn’t too far off from what they would have earned in treasuries. Wage inflation at 3-5%? Treasuries at the same %? What duration? I don’t have the time for the research, but for the sake of argument, let’s assume wage inflation was roughly equivalent to treasury yields.
Of the $355k, if you assume the $250k is paid only 20 years from now, with the other $105k paid out evenly over the other 19 years (they were generally healthy until they were not and they live to be 85), discounted to the present at, say, 5% per year to be generous, in order to try to get the number down, the value of the $355k benefit over time when they were 65 would be $161,000.
So, they paid in about 25-30% too little in my example. I’m sure the actuaries in the audience could play with the numbers to show that they are equal, but that might be hard to do…the higher the wage inflation assumed, the lower the nominal contributions.
The only way to make it work is to show that US Treasuries earned substantially more than wage inflation over sustained periods of time, and we have relatively high rates of returns on treasuries from right now over the next 20 years. I was very nice with my assumed yield of 5% going forward. If you apply the current yield curve to the next 20 years for the discount rates (you invested the money needed 20 years from now in a 20-year treasury, the money needed 10 years from now in a 10-year treasury, etc.), the present value of the Medicare benefit at age 65 is over $250k.
The only way to get the amounts paid in over 45 years to be equal to that amount, is if the differential between Treasury yields and wage inflation is greater than 3%. Meaning that if wage inflation was at 3% (sustained, never higher, or lower), long-term treasury yields were over 6% (never higher, never lower), in a sustained manner for all of the prior 45 years.
In any event, it’s all academic anyway. Even if people had put away enough money to pay for Medicare (which I seriously doubt), the government spent it anyway.
Hong Kong Billionaire Fills Funding Gap in U.K.’s Low-Cost Housing (Bloomberg)
Billionaire Cheng Yu-tung and two fellow Hong Kong investors, faced with soaring real-estate prices at home, are helping the U.K. plug a gap in funding for low-income housing after gaining control of a London-based property manager.
Cheng’s Chow Tai Fook Enterprises Ltd., developer Sammy Lee and businessman Peter Fung last month paid 30 million pounds ($48 million) for 61 percent of Pinnacle Regeneration Group Ltd., manager of 22,000 homes in the U.K. Cuts in social housing are part of the British government’s plan to trim a record deficit with the biggest spending reductions since World War II.
“There is a big opportunity for investors directly coming to the fore because of the cutback in funding,” said James Coghill, a real-estate investment adviser at Savills Plc. (SVS) “Social housing providers are seeking other funds and need to become more commercial.”
A change in U.K. law last year enabled investors to profit for the first time from social housing in Britain, where there’s a waiting list of 1.8 million households. With property prices at home skyrocketing, Hong Kong investors are putting money into U.K. real estate ranging from subsidized housing and office buildings to luxury properties and infrastructure.
Home prices in Hong Kong have risen more than 70 percent since the beginning of 2009 on record-low mortgage rates and an influx of buyers from mainland China. The Hong Kong government imposed restrictions to curb rising values, such as increasing the required down-payments.
‘Very Hot’
“The Hong Kong market is very hot,” said Lee, 53, who also developed a 200-apartment complex in London’s affluent Knightsbridge neighborhood that opened in 2005. “We’ve got to diversify and the first port is London.”
U.S. home sales fall 9% compared with June 2010; canceled contracts blamed
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:38 a.m. Wednesday, July 20, 2011
Contract cancellations are being blamed for sliding national June home sales that fell slightly from the previous month and are 9 percent below sales during the same time in 2010.
Analysts at the National Association of Realtors, which released a June home sales report this morning, said it’s unclear why more existing home sales contracts were canceled in June. About 16 percent of association members in a survey said they had contracts canceled last month, up from 4 percent in May.
canceled contracts blamed
I laughed so hard when I saw that. So these idjut would-be buyers are buying w/so little leeway in their budgets that the few rumbles we’ve seen so far are sending them scurrying? Wait till the real fireworks begin.
Guess they were hanging their hats on that promised V shaped economy.
I think just yesterday that the MSM said applications for home loans increased more than expected. LOL
Memphis school board: No school until city pays up
By the CNN Wire Staff
July 20, 2011 11:07 a.m. EDT
Schools in Memphis, Tennessee, will not open for the new school year until the school board receives at least $55 million of the money it is owed by the city.
The Memphis City Schools Board of Commissioners voted on the delay Tuesday night.
“MCS Board of Education voted to indefinitely delay the opening of our schools, pending the resolution of a long-standing funding dispute with the City of Memphis,” school system attorney Dorsey Hopson said in a statement.
The board says it is owed a total of $151 million, according to the Commercial Appeal newspaper of Memphis. That includes what the city still owes for the 2008-09 school year, shortfalls on two subsequent school years and $78 million for the upcoming year.
The board wants $55 million immediately to open the schools, Martavius Jones, school board president, told CNN Wednesday. That “is the magic number,” he said.
————-
Schools in Memphis, Tennessee, will not open for the new school year until the school board receives at least $55 million of the money it is owed by the city.
Related story: Memphis children are dancing in the streets. Film at 11.
School’s out for-ever!
Why didn’t this kind of stuff happen when I was a kid? @##$$
It reminds me of a Jay Leno monologue. where he was addressing recent incidents of female high school teacher having sex with their students: “Where were these teachers when I was in school?”
I think on a list of states w/the most fraud and graft Tenn was among the worst. But this sense of backbone is kind of exciting.
Finally we’re seeing some hardball.
Public servants - gotta luv them:
Compton Cuts 30 Percent Of Workers In New Budget
July 19, 2011 10:28 PM
COMPTON (CBS) — The Compton City Council has diverted a potential government shutdown by approving a budget Tuesday night that calls for massive layoffs.
The new budget would require the city to slash 30 percent of its workforce.
Compton officials have been struggling with how to deal with a $25 million deficit and avoid a government shutdown.
The Council has twice voted down a proposed budget that would lay off 90 workers, including some department heads.
The city treasurer made a point of saying this week that he wouldn’t issue paychecks until the Council approved a budget.
Unions representing city employees have threatened to sue if a budget plan calling for layoffs was passed.
Maybe someone should ask how Bob Buckhorn, the new mayor of Tampa, was able to cut back without laying off workers.
Per city-data DOT com:
March 2011 unemployment rate in Compton is 20.5%
70% support for Obama in 2008 election
50% educational level is less than high school
Birthplace of Suge Knight of Death Row Records
Birthplace of Krist Novoselic of Nirvana (WTF?)
If you had the power to fight back, you wouldn’t? If I could have fought back when I was laid off, I sure would have. Problem was, it was just me vs. a multi-national corporation. I didn’t have a snowball’s chance in hades.
It’s like being jealous of a swimmer who doesn’t drown, and you call him a goon or a thug because you would sink to the bottom because you’re not a swimmer.
Always the bucket of crabs trying to pull each other down instead of working together to get out of the bucket (and eat the bucket carrier).
It’s like being jealous of a swimmer who doesn’t drown, and you call him a goon or a thug because you would sink to the bottom because you’re not a swimmer.
That is becuase a public union goon is standing on MY HEAD to keep himself from above water.
Public union goons expect you to swim for you and for them…
Actually there is a pod of blue whales on top of you both.
So your private sector employer can treat you like crap because state and muni employees are union?
I don’t think so.
You should form a union where you work. You might even get your super profitable employer to provide you with decent health insurance and maybe even a pension!
The blame game has been going on most likely since the beginning of man. It really intensifies when times get tough, we are heading into another phase of our great correction so the yelling and finger pointing will get much worse.
~ Whose fault? U.S. News &World Report says we-the-people must accept some blame for the debt impasse.
“Many ordinary Americans have contributed to the debt problem too, by demanding a free lunch from the politicians they send to Washington. The federal tax burden has been declining over the last decade, while government spending on a per-person basis is higher than it has been historically. We’re basically trying to sustain a generous welfare state–particularly with regard to Medicare and Social Security benefits for seniors–without the taxes required to finance it. The result is mounting debt that could bury future generations.
“Americans are beginning to understand that perpetual deficit spending is a dangerous Ponzi scheme, but there’s still rampant inconsistency about how to solve the problem. Surveys repeatedly show that most Americans want retirement benefits and other government programs to continue at current levels, yet they’re opposed to the tax increases or deep cuts elsewhere that would be required to pull that off. So in a way, the debt problem really is everybody’s fault. Let’s just hope America as a whole hasn’t lost its mind.”
“Americans are beginning to understand that perpetual deficit spending is a dangerous Ponzi scheme”
Again that word: Ponzi. Perpetual, huge deficit spending is bad, but it’s not a Ponzi scheme, no more than an individual maxing out his CCs to buy stuff he can’t afford is a Ponzi scheme.
A Ponzi scheme is a fraudulent investment scheme where investment money from newer investers is returned to earlier investors as a return on their investment when in fact there was none.
You are focusing on a small matter, fact is the SS system is designed like a Ponzi scheme, the only way the top gets paid is if money comes in from the bottom.
The main point is it is not sustainable in it’s present form.
“Again that word: Ponzi. Perpetual, huge deficit spending is bad, but it’s not a Ponzi scheme”
OK
Americans are beginning to understand that perpetual huge deficit spending which on a per-person basis is higher than it has ever been historically with mounting debt that could bury future generations is not a Ponzi scheme.
But it ain’t good either.
Is Social Security a Ponzi scheme?
If not what is it?
Does SS pretend to be an investment program with high returns?
No, it does not. Therefore it is not a ponzi scheme.
Does it have potential problems? Yes, it does. Problems that can be addressed by changing payouts, retirement ages and how much is collected via the payroll tax.
“Does SS pretend to be an investment program with high returns?”
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.[26]
Is an insurance company a PONZI scheme?
SS is an insurance plan against starving in the street when you get old.
New buyers of treasuries have to pay back current buyeres of treasuries.
Many ordinary Americans have contributed to the debt problem too, by demanding a free lunch from the politicians they send to Washington. The federal tax burden has been declining over the last decade, while government spending on a per-person basis is higher than it has been historically
Did the people really vote for tax breaks for the elite, if they did was it because of an Massive MSM propaganda program to convince them that giving tax breaks to the elite would create jobs? We know who benefited from the capital gains tax cuts, dividend tax cuts, deregulation, and a trade policy that gutted the middle class.
Something’s fishy: Robosigning whisleblowers resign???
Pam Bondi is pro-justice (anti-megabank unreality). Makes no sense - there is way more to the robo-signing story. Maybe much of it is a fabrication? I always thought the whole thing was actually orchestrated by the megabanks as a stalling tactic. (Keep in mind they all are/would be immediately insolvent if the foreclosures were sold):
http://www.orlandosentinel.com/news/politics/os-scott-maxwell-ousted-investigators20110720,0,660118.column
Northern Trust’s Net Income Declines 24% on Low Interest Rates (Bloomberg)
Northern Trust Corp. (NTRS), the third- largest independent U.S. custody bank, said second-quarter profit fell 24 percent as low interest rates reduced revenue from lending and money-market funds.
Net income decreased to $152 million, or 62 cents a share, from $200 million, or 82 cents, a year earlier, the Chicago- based company said today in a statement. Excluding expenses related to restructuring, acquisition and integration, results beat the 69-cent average estimate of 21 analysts surveyed by Bloomberg.
“It looks like they are beginning to take action that will result in expense savings going forward,” Marty Mosby, an analyst at Guggenheim Securities LLC in Memphis, Tennessee, said in a telephone interview.
Northern Trust has lagged behind rivals in making acquisitions that can offset the impact of low interest rates. The company purchased the securities-servicing unit of Bank of Ireland Plc in June for as much as 60 million euros ($85 million). That compares to State Street Corp. (STT)’s takeover of the asset-servicing unit of Italy’s Intesa Sanpaolo SpA in May 2010 for 1.28 billion euros, and Bank of New York Mellon Corp. (BK)’s $2.31 billion purchase of PNC Financial Services Group Inc.’s global investment-servicing business in July 2010.
St. Jude Medical job cuts to affect 450 by end of 2012
St. Jude Medical (NYSE:STJ) will lay off 450 people by the end of next year as it moves manufacturing of its cardiac rhythm management products from Sweden to Puerto Rico and Malaysia.
The job cuts were prompted by a continued weakness in the CRM market domestically.
“U.S. CRM sales fell into a pot hole,” said Dan Starks, president and CEO of St. Jude Medical, in a conference call with analysts on Wednesday, adding that 28 percent of overall sales comes from the U.S. CRM division.
This is the tip of the Iceberg, medical layoffs will be the story of 2012 and beyond.
I can’t say that I’ve been in too many medical settings where I didn’t think that they were overstaffed.
Mind you, I’m not referring to hospital ICUs, but the doctors’ offices I’ve been in seemed to have way too many people for the number of patients.
HanesBrands slumps as costs remain a concern
“It also sees double-digit wage-increase pressures in its producing regions including Central America, China and Vietnam”.
NEW YORK (MarketWatch) — Shares of HanesBrands Inc. HBI -8.96% on Wednesday saw its shares tumble 8.9%, their biggest decline in more than two years, after the company said that even as cotton costs have declined in recent weeks, its expenses for the commodity remain a concern. It also sees double-digit wage-increase pressures in its producing regions including Central America, China and Vietnam. HanesBrands plans to raise prices, its third such move this year, in the fourth quarter to cover cost increases heading into 2012. Still, that’s expected to lead to fewer unit orders from retailers as stores mull whether they have room to pass on inflationary pressures to their still budget-cautious consumer, analysts said. HanesBrands kept its full-year profit forecast the same, with a 20-cent range. The Winston-Salem, N.C.-based company makes Hanes underwear, Champion T-shirts and Playtex bras and sells to retailers including Wal-Mart Stores
Oxide is going to open a sock-making shop in South Sudan. She says I can have a job there. She will work on weekends and I will work on Wednesdays. Wanna join?
My brother used to work there, in procurement. He said that Mexico was “too expensive”, even though the minimum wage there is 59 pesos a day (about $5 USD a day).
So by global standards, Mexican wages are “lavish”.
The race to the bottom ain’t pretty.
He used to work in Oxide’s sock-making shop?
He worked at HQ in Winston-Salem. The sock making shops were in places like the Dominican Republic.
Looks like the great American consumer is doing more shopping from the couch…
Home shopping goes high end CNN Money
With a resume that includes eight years at Harry Winston and consulting gigs with Faberge and Ivanka Trump, Carol Brodie has earned her title as “Queen of Diamonds.” This queen, however, also happens to know the value of a good deal.
When Brodie launched her own line of fine jewelry two years ago, she didn’t head to Rodeo Drive or Fifth Avenue, she went straight to HSN — the 24-hour home shopping network.
HSN’s customers are snatching almost everything in Brodie’s Rarity jewelry line up. Last month, a pair of 8.75-karat pave champagne diamond earrings, which retailed for over $3,000, sold out in one appearance — at 3 a.m. in the morning.
“I sell much more jewelry than I ever could have done going the traditional route,” she said.
Once scorned as cheesy and out-of-date, home shopping channels have gained luxury credibility thanks to an influx of high-end designers, such as Jonathan Adler and Badgley Mischka, looking to peddle their wares to a broader audience and bring in more revenue.
“The recession may be the best thing that happened to the home shopping networks because designers needed new outlets to offer more affordable prices,” said Jack Plunkett, CEO of Plunkett Research.
By selling directly to the consumer, shopping channels eliminate the steep mark-ups taken at boutiques and department stores and offer more competitive pricing, said Plunkett.
To keep costs for her Rarities line of jewelry more affordable for the masses, Brodie works with 10-karat gold or gold vermeil and chooses less expensive champagne diamonds over white ones.
Even after cutting those costs, prices for her line of necklaces, rings and earrings, which are made with semi-precious and precious stones, still reach well past the $1,000 mark.
Nevertheless, the customers keep coming.
To keep costs for her Rarities line of jewelry more affordable for the masses, Brodie works with 10-karat gold or gold vermeil and chooses less expensive champagne diamonds over white ones.
10-karat gold is hardly “fine” jewelry. It’s middle-class. In other words, HSN is STILL CHEESY.
Let’s see, the Greeks couldn’t pay off the first loan/bailout, certainly have no way of paying off the second. So the solution appears to be drive deeper into debt that you can’t pay. Good thing all these people are flying all over the world fixing things.
Banks ready multi-strand Greek rescue plan:
FRANKFURT/LONDON | Wed Jul 20, 2011
(Reuters) - Banks are poised to offer a complex Greek rescue proposal, which excludes a bank levy, to a meeting of euro zone leaders on Thursday, industry sources said.
The banks are ready to fight a levy in the courts if one is imposed on them to fund a Greek bailout, arguing it would unfairly punish those not exposed to the country, two of the sources said on Wednesday, though it was not clear on what grounds a legal case would be made.
The proposal from private sector creditors to Greece, being coordinated by the Institute of International Finance, would include a range of options but may not be the quick fix many are hoping for.
A private sector contribution that would reduce Greece’s debt by up to 40 billion euros ($56.8 billion) is among the proposals, one senior bank industry source close to the talks said. But sources warned discussions remained fluid.
“It’s difficult to achieve all objectives on liquidity and debt relief. A lot is being asked … the public sector involvement is being presented as some sort of panacea,” one of the sources said, echoing comments by German Chancellor Angela Merkel.
Euro zone officials will hold an emergency summit on Thursday to try to agree a second rescue of debt-stricken Greece, as fears mount its crisis will spread to other peripheral euro zone countries.
Merkel, who will meet French President Nicolas Sarkozy later, said on Tuesday that the summit would not produce one “spectacular” solution to solve everything.
It will be interesting to see the European “non central government” levy a tax! LOL.
I say Andy dandy for vice president. Look how he can solve the problems. Andrew is such a pander bear.
ALBANY — Gov. Andrew Cuomo on Tuesday rolled out a sweeping plan to help revitalize the state’s economy, complete with an ad campaign and competitive grant program designed to spark innovation.
But businesses have a more immediate concern: The bill is coming due for New York’s unemployment insurance.
Citing the need to borrow more than $3 billion
from the federal government to prop up its chronically empty account, the state faces a whopping $95 million interest payment on loans for the fund due Sept. 30.
As a result, the state Department of Labor is assessing businesses up to $21.25 per employee to cover the cost. That payment is due Aug. 15.
Complaints about what businesses describe as a hidden tax were rolling in Tuesday after numerous employers received the notices and as Cuomo expounded on his plans for the economy.
“This is something that could — depending on the number of employees — be a pretty hefty cost in this economy,” said Mike Durant, New York state director for the National Federation of Independent Businesses.
When asked about the surcharge during a news conference outlining his revitalization plans, Cuomo stressed that the bill for interest is ultimately coming from Washington, D.C.
http://www.timesunion.com/local/article/A-big-bill-for-your-boss-1472786.php#ixzz1SfSrXrwY
With such a success of Jersey Shore, I think we are ready for our first Italian American president.
I think his family might have a skeleton in the closet.
Well maybe if those companies didn’t outsource so many people, the state wouldn’t need so much unemployment insurance! If I were a corporation, I would pay the $21.25, outsource the employee, save $50K, and keep my yap shut.
Are corporations as stupid as all that?
It’s not just a river?
Homeowners in Denial About Value of Properties
http://finance.yahoo.com/news/Homeowners-in-Denial-About-nytimes-2586795538.html?x=0&.v=1
Homeowners, especially those who bought their houses after the real-estate bubble burst, are still having trouble accepting just how much the values of their properties may have fallen, says a new report from the real-estate site Zillow.
Current sellers who bought their homes in 2007 or later, an analysis of the site’s home listings shows, are overpricing their properties by an average of 14 percent.
Sellers who bought their houses before the bubble, and those who bought during the big run-up in home values, also are overpricing their homes, but not by as much. Those who bought before 2002 are pricing their homes roughly 12 percent over market value, while those who bought from 2002-06 price them about 9 percent over market value.
” Those who bought before 2002 are pricing their homes roughly 12 percent over market value, while those who bought from 2002-06 price them about 9 percent over market value.”
That`s about right. The problem is market value is still in fantasy land for a decent SFH in a decent neighborhood.
I think that the River Denial has opened up a new tributary behind me.
Recall my story about the behind-me house that was recently offered for sale as a rent-to-own. I might add that the recent listing, which didn’t sell, was the third time since 2007 that this house has been put on the market.
It last changed hands in 2006, when the longtime owner finally sold it after it had been on the market for almost nine months. There was a brief interruption of the on-market time while it was being staged in September 2005.
I didn’t think that staging the place would help, and it didn’t. The original asking price was $165k. The post-staging price was somewhere in the high $140s and the final sale price was $135k, all cash.
The 2006 purchaser was a University of Arizona student/real estate agent who put the place back on the market in April 2007. (He graduated in May 2007 with a business degree.) Asking price: $165k.
It didn’t sell, so the UA grad/flipper/owner/agent started renting it in September 2007. It’s been a rental ever since.
Owner/landlord has made two attempts two sell. First was last summer, and he was not the listing agent. Didn’t sell. Asking price was somewhere around $145k. Then he tried rent-to-own for around $140k and that didn’t work either.
The student tenants vacated last month, and I’ve noticed a new set of people back there. It’s a couple. They work in office jobs, and the guy looks a lot like the owner of the property.
I’m guessing that he and girlfriend/wife/whatever have moved into the place instead of paying rent elsewhere. And they’re probably going to live there “until the market improves.” In Tucson-ese, that means when prices start going back up again, but that ain’t gonna happen anytime soon.
“It didn’t sell, so the UA grad/flipper/owner/agent started renting it in September 2007. It’s been a rental ever since.”
Slim, any idea what the rent was or would be on this house?
TSA to End Person-Specific Body Scan Images
(Bloomberg)
Body scanners at U.S. airports will stop using person-specific images for passenger screening, the U.S. Transportation Security Administration said.
The TSA will install software that will detect items that could pose a threat to passengers by using a generic body outline, the Washington-based agency said in a statement today. Passengers will be able to view the same outline TSA officers can see, according to the statement. If scanners identify a potential threat, additional screening will be required.
“This software upgrade enables us to continue providing a high level of security through advanced imaging technology screening, while improving the passenger experience at checkpoints,” TSA Administrator John Pistole said in the statement.
I have a relative who said she had this great plan. She was gonna tie a bunch of tampons to her body underneath her clothes. Then, when they called in all the security, etc, she was going to say that she had a perspiration disorder and needed the tampons to keep her dry.
Good idea, huh?
I think it’s just this extra hot weather that’s keeping the home buyers from snapping up deals right now. Who wants to get out and house shop in this heat when you can lay on the couch in the A/C and shop on the HSN.
Why get off the couch when you can consume in a supine pose.
Or as Jim Gaffigan says: My two favorite things are eating and not moving.
My HBB page has a Montelongo flipper seminar ad. Surreal.
But just think of all you could learn, and it’s free! He will share his infesting/flipping secrets and he doesn’t do that with just anybody.
I would go but I don’t enjoy throwing up.
You hate to see stories like this, but there is a reason there are safety rails in place. With signs in multiple languages that read do not cross.
~ U.S. Rangers Search for Hikers Reportedly Swept Over Falls at Yosemite National Park Published July 20, 2011| FoxNews.com
Authorities are searching for at least one hiker who they believe plunged over 300 feet from a popular waterfall at Yosemite National Park Tuesday after reportedly climbing a safety fence to pose for pictures next to the falls.
Witnesses of the incident at Vernal Fall, which has a 317-foot drop, appear to have varying accounts of the incident, even to the point of how many people fell, which adds difficulty to an already challenging search and rescue attempt.
The incident is said to have occurred at 1:30 p.m. local time on Tuesday. A group of about 10 people made the 3-mile trek to the top of the falls and a few climbed over the safety rail, according to local reports.
KSEE reported that two hikers tried to line up for a closer view of the waterfall. They reportedly lost their footing. Another hiker saw the slip and tried to save them, but all three fell.
One witness told the CBS affiliate in Fresno that he saw one of the hikers go over the falls.
“I saw the man’s eyes when he went over the falls. That was devastating,” Jacob Bibee reportedly told the station.
“I saw the man’s eyes when he went over the falls. That was devastating,” Jacob Bibee reportedly told the station.
But it was the ultimate E ticket ride … until it ended.
Another Darwin awards candidate.
There is no railing or fence where my dad’s uncle went in above Niagra Falls after WWII. All you need to do is take that one step.
Crude’s back over $98.00 I hear gas is back @ $5.00 in NYC. Speculators are calling for a jump/spike into the $120.00 - $150.00 range. That should help with the summer driving season.
169 losing jobs at Baystate
Additional 185 positions to be left unfilled
Wednesday, 20 Jul 2011
SPRINGFIELD, Mass. (WWLP) - Baystate Health is laying off more than 150 workers, and leaving more than 180 more positions unfilled, the company announced Wednesday.
According to a statement sent to 22News by Baystate spokesperson, Jane Albert, Baystate will eliminate the positions of 169 managers and staff. An additional 185 vacant positions will be left unfilled.
In the statement, Baystate says a weak economy and insufficient reimbursements from the state are to blame for a $25 million budget shortfall, which they say will grow to $54 million in 2012 if changes are not made. “The three hospitals of Baystate Health - Baystate Medical Center in Springfield, Baystate Franklin Medical Center in Greenfield, and Baystate Mary Lane Hospital in Ware - were underpaid $26.5 million by the state government for the cost of care for Medicaid patients in 2010. Medicaid patients represent 26% of the patient population at Baystate’s hospitals, resulting in significant financial loss for care of these patients,” the statement says.
Severance pay and other benefits will be provided to those being laid off, Baystate says.
So much for the healthcare bandwagon. When people have no money and no health insurance, they do without.
So much for the healthcare bandwagon. When people have no money and no health insurance, they do without.
Funny how that works. And I’ve heard anecdotal reports that business at doctors’ and dentists’ offices is way down.
I was able to get into the dentists with one days notice for a checkup. Apparently I have a cracked tooth that will eventually need a crown. I have decide to put it off for now, as the tooth doesn’t hurt. They did try to schedule me in, but right now I have other demands for the $300+ cost of the crown. May later this year. But I can certainly see a lot of people balking at the cost, especially if they are uninsured.
I’m sure more than a few chose to have the tooth pulled when it starts hurting as they can’t afford the $600+ total cost.
“Funny how that works. And I’ve heard anecdotal reports that business at doctors’ and dentists’ offices is way down.”
I snatched a few cars from lawyers back in my repo days, but never a doctor or dentist.
Funny how that works. And I’ve heard anecdotal reports that business at doctors’ and dentists’ offices is way down.
When I was at the vet last week, someone from the dentist office next door came in and offered the vet employees teeth whitening at cost. He said it was normally $450 and it was being offered to the vet employees at $60.
Seafood sales decline at restaurants
MarketWatch News Break July 20, 2011
Sales of seafood entrees have been sliding in recent years, with consumers opting for less expensive meals when eating out. The exceptions: salmon and sushi, which are growing in popularity with Baby Boomers.
The imported Chilean salmon has really gone up in price. I remember when 3 lb bag of fillets was $14 at Sams Club, Now its $23.
It seems the powers that be have forgotten a major concept of economics… that is, for an economy to function, money has to be moving.
I remember pictures in both my high school and college econ classes of money flowing up through the econony from rich to poor through purchases as stores oned by the rich, of goods manufactured in the factories owned by the rich, etc. Then, the money flowed back down through things like wages, loans and transfer payments…. If I recall, the loans were offset by “repayments and interest”… har, har. As if the poor can pay back thier loans! They default then the government covers the loss.. duh.
Anyway.
It seems we have forgotten that money needs to keep moving. All the flapping heads on CNBC and other financial news programs seem to think that we can have an economy with just a few thousand really, really, really rich people inflating bubbles by selling each other overpriced loans that they’ve made to each other.
The wage pipeline is broken with job offshoring to 3rd world ceaspools. The loan pipeline is how we thrived for the last 30 years, but it is now shutting down as both businesses and households are maxxed out on debt and can’t make minimum payments even at near 0% interest rates. The transfer payments is “kind of” working. The rich are loaning their money to the government who then pumps it into the economy via $1.5T a year deficits… but that will only work as long as we maintain the illusion that we can actually pay the money back…. or at least that we’re willing to pay interest on the debt no matter the market rate.
So, how do the rich think that the economy will function when they are the only poeple that have money? Or do they think the great unwashed masses will accept the Mexico-ification of the USA?
So, how do the rich think that the economy will function when they are the only poeple that have money?
They don’t care about the economy. They just want to own all the marbles.
And “marbles” includes us. The more I learn the more I see slavery in a new form. Or maybe an old form I’m just not well educated on. Like living in the woods and not being allowed to eat “the king’s deer” or grow crops on the king’s land. Once TPTB own everything you can’t survive without breaking the law or working for them for whatever wage they feel like paying.
I think the world population has grown to teh point where it just doesn’t matter. The rich will control natural resources communications and it won’t matter that the middle class is shrinking in the US. At least until the riots.
The middle-class is working for the government, for a corporation with a government contract, or sitting at home in their depends diapers waiting for the government benefit check. There will be no riots unless the music stops.
http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-072011.html?sub=TD&o=410510&s=413735&u=48412125&l=286916&r=Milo
Massive fraud-fueled real estate speculative bubble plus tens of millions of impoverished, womenless migrant workers pissed off at the world…this won’t end well.
With all the abortions and infanticide against unborn females, China’s male-female imbalance is exceeded only by the widening gulf between the neavu riche (many corrupt Communist Party cadres) and the huge masses of peasants and migrant workers already on the margins and now being ravaged by Bernanke-induced food inflation. Social unrest, here we come.
119 boys for every 100 girls is expected to leave 24 million men without partners by 2020. I hope they are pushing the benefits of the gay male lifestyle to those Chinese young men. Hope they have a Queer Eye for the Gay Guy tv show there.
24 million. That’s a lot of mail order brides.
From where?
North Korea
They are already picking Mongolian women (China’s Historic Enemy), they have to keep it secret from friend’s and even some family. It is frowned upon for a Han (Chinese) to marry a mongol.
Housing anecdote alert!
So the wife and I are walking the 3 miles to REI to get a pair of shoes and we pass this house with a Realtwhore sign out in front. The house is a stucco crap shack on a busy road near a mall. Before we looked it up, we did a “Price is Right” contest on it. She said 450K and I said 850K. The link says that it was sold in January for 810K so she wins by not over-bidding. But that’s the difference b/w MrBubble who knows the idiocy of this market and MrsBubble, a hard-working pragmatist who understands the price and the value of most things.
Also why is the sign still up? Free advertising for the Realtwhore?
I would not pay more than 300K for this POS (our rent is $1500 for a small place). MrsBubble probably less.
MrBubble
From the listing.
The average price per square foot for homes for sale in 94925 is $461.
Will they ever stop meddling with the system… Nope, not until it is so badly deformed no one can recognize it.
U.S. Weighs Plan to Help 1 Million Keep Their Homes
(Bloomberg)
The U.S. Treasury Department is exploring a plan that could help 1 million or more homeowners avoid foreclosure, according to housing market executives.
The proposal is aimed at promoting modifications of delinquent or defaulted home loans, including write-downs of principal, by bringing fresh private capital into the market. It would apply to mortgages that are bundled into mortgage-backed securities not issued by government agencies.
One of the impediments to breaking the nation’s cycle of foreclosures and falling home values is that write-downs can’t happen under the covenants governing such securities. The proposal being looked at by the Treasury is aimed at unlocking the so-called private-label notes that account for about 20 percent of the $6.8 trillion in mortgage-backed securities outstanding.
“This is not a silver bullet, but it is one of the tools that should be used,” said James Lockhart, the former regulator of mortgage companies Fannie Mae and Freddie Mac. “We think this would be a way to stop some of the foreclosures, help stabilize neighborhoods and help save some families.”
Helping homeowners avoid foreclosure would bolster the housing market, which Federal Reserve Chairman Ben S. Bernanke called “one of the major sources of the slow recovery” in testimony to Congress last week.
Wait… only 20% of mortgages are in these MBS?
Are we doing principal write downs on the 80% NOT locked up? If so, heck, I’m going to stop making payments on my house so I can get me a write down on principal.
Oh… we’re not?
So, this is really just ising government money to buy loans back from MBS so government eats the loss instead of the MBS holder???
In that case, no thanks.
Great Lakes Crusing Update:
Once again, I have left the security of my little dock and ventured out upon the big waters. There is a drastic change this year. Dramatically less traffic. Every gas dock, club and marina I stop at along the eastern coast of Lake Ontario says it is awful. July 4th was busy and then it went dead, is the common line. Oddly, much fewer cottages for sale than in previous years. I am having a great time. The weather has been awsome and I am taking refuge in Kingston for the scorcher that is headed this way.
We spent last night anchored in Big Sandy Bay on Wolfe island. It is a beautiful spot, with miles of beach and dunes, wildlife preserve. Now blanketed with windmills. ironic to see the signs about not walking on the dunes “cause they’re fragile” and all these giant mechanical spiders planted there by the stupid Neo-Environmentalist gov’t teat money for destruction programs. For the first time ever, I saw three hawks or eagles and a Turkey Vulture lying dead in the sand. Damn.
Apparently, nobody wants to conserve any energy so we have to get it from somewhere. Either coal kills us all and all the birds, highly subsidized nukes make us glow or wind power kills a few birds. There is no free lunch here. (Often with better siting, the birds kills can be minimized at the expense of a windmill or two as has happened at a variety of new wind farms).
It is quite obvious that there is no money for politicians to cheer for conservation. Quite the contrary. What a farce though, to build bird killers in a friggin wildlife sanctuary.
It’s a wildlife sanctuary?? Oh brother. I did not read the “wildlife preserve” in your post. While my statement still stands in general, I retract it for this specific case.
In yesterdays bit bucket people were talking about the massive size of Denver International Airport. They powers that be may have said they bought all the land for a space port, but that piece of land was sold around to different S&Ls to save their balance sheet before the auditors came in. By the time the scheme collapsed the only option for the overpriced land was DIA. Pena became the secretary of transportation, got a toll way named after him, and all was well.
Read about it, the Bush son that was on the board of directors of the bank that started it, and more in the book ‘Silverado : Neil Bush and the savings and loan scandal’
Find it in a library near you:
Silverado : Neil Bush and the savings and loan scandal
That probably explains why the airport was built out in Timbuktu.
I rode a city bus from the MEPS downtown to Stapleton once and it wasn’t very far. In fact I think that was the last time I rode a city bus.
This was the biggest boondoggle ever.
The existing airport was convenient close and could have expanded into the airforce base that was closing. INstead they put the airport miles out of the city and make it hard to get to. I’m sure the taxi cap owners and car rental companies loved it. They paid top dollar for the land. There were problems with overpriced contractors.
“There were problems with overpriced contractors.”
Not to mention the automatic luggage system.
Role reversal: Latin America taunts US on debt woes
By Brian Winter
SAO PAULO, July 20 (Reuters) - After three decades spent battling their own debt crises and getting constantly lectured about them by Uncle Sam, many Latin Americans are watching the countdown to a possible default in Washington with a mix of schadenfraude and fear of what a collapse might mean for them.
For everybody from presidents on down to street vendors, seeing U.S. politicians argue over where to make painful budget cuts has also been a reminder that those days are over in Latin America. For now, at least, as most of the region enjoys an era of economic prosperity and comparatively tiny deficits.
In Washington, lawmakers were working feverishly to combine elements of a plan to raise the U.S. debt ceiling with market-pleasing proposals to cut spending. Congress must approve an increase in the $14.3 trillion U.S. debt ceiling by Aug. 2 or the government will run out of money to pay its bills.
“When did the American dream become a nightmare?” gloated Argentina’s President Cristina Fernandez, whose own country defaulted on about $100 billion in debt a decade ago.
In a speech at the Buenos Aires Stock Exchange on Monday, she contended that Argentina had prospered since then by focusing on exports and controlling financial speculation — a lesson that Washington has yet to learn, she said.
The Americans “thought that money just reproduces by itself, and only in the financial sector, without having to produce any goods or services,” Fernandez said.
Washington’s biggest critics in the region, such as Venezuela’s Hugo Chavez and Bolivia’s Evo Morales, have also portrayed the crisis as an inevitable outcome for a country that failed to follow its own financial advice and overextended itself militarily — in Latin America, and elsewhere.
“If they didn’t spend money on military bases and keeping troops in other parts of the world, I think the United States could easily resolve its financial crisis,” Morales said last week, according to state news agency ABI.
“If they didn’t spend money on military bases and keeping troops in other parts of the world, I think the United States could easily resolve its financial crisis,” Morales said last week, according to state news agency ABI.
I’m with ya, Evo.
Just imagine what bringing them home would do to the UE numbers. Youch!
The Americans “thought that money just reproduces by itself, and only in the financial sector, without having to produce any goods or services,” Fernandez said.
Funny how foreign leaders understand that wealth is linked to the creation of goods and services. If only ours did.
Argentina went through an economic crisis beginning in the mid-1990s, with full recession between 1999 and 2002; though it is debatable whether this crisis has ended, the situation has been more stable, and improving, since 2003.
Argentina defaulted on part of its external debt at the beginning of 2002. Foreign investment fled the country, and capital flow towards Argentina ceased almost completely. The currency exchange rate (formerly a fixed 1-to-1 parity between the Argentine peso and the U.S. dollar) was floated, and the peso devalued quickly, producing higher-than-average inflation.
Large-scale debt restructuring was needed urgently, since the debt had become unpayable. However, the Argentine government met severe challenges trying to refinance its debt. Creditors (many of them private citizens in Spain, Italy, Germany, Japan and other countries, who had invested their savings and retirement pensions in debt bonds) denounced the default; the Italian government lobbied against Argentina in international forums. Vulture funds who had acquired sovereign bonds during the critical moments, at very low prices, asked to be repaid immediately.
They are right that we need to focus on increasing exports and cutting imports. They are wrong that just bringing troops home would be close to enough.
We are screwed in so many ways.
From Mr. Mauldin’s newsletter
Monetary Policy’s Numerous Misadventures
Fed policy has aggravated, rather than ameliorated our basic problems because it has encouraged an unwise and debilitating buildup of debt, while also pursuing short term policies that have increased inflation, weakened economic growth, and decreased the standard of living. No objective evidence exists that QE has improved economic conditions. Even before the Japanese earthquake and weather related problems arose this spring, real economic growth was worse than prior to QE2. Some measures of nominal activity improved, but these gains were more than eroded by the higher commodity inflation. Clearly, the median standard of living has deteriorated.
When the Fed diverts attention with QE, it is possible to lose sight of the important deficit spending, tax and regulatory barriers that are restraining the economy’s ability to grow. Raising expectations that Fed actions can make things better is a disservice since these hopes are bound to be dashed. There is ample evidence that such a treadmill serves to make consumers even more cynical and depressed. To quote Dr. Cochrane, “Mostly, it is dangerous for the Fed to claim immense power, and for us to trust that power when it is basically helpless. If Bernanke had admitted to Congress, ‘There’s nothing the Fed can do. You’d better clean this mess up fast,’ he might have a much more salutary effect.” Instead, Bernanke wrote newspaper editorials, gave speeches, and appeared on national television taking credit for improved economic conditions. In all instances these claims about the Fed’s power were greatly exaggerated.
“it is possible to lose sight of the important deficit spending, tax and regulatory barriers that are restraining the economy’s ability to grow.”
Do these ashats really believe this?
The deficits are not restraining the economy’s ability to grow. It is the only thing preventing Main Street consumption from falling off a cliff. The $1.5T a year in federal deficits is the new debt that our trade deficit based economy needs to function.
Do these guys really think that Main Street is going to accept Mexicoification of the USA? Really?
We’ll just let them have all the money, and let them blow bubbles and run stock and commodity scams day and night, while the standard of living of the 299 million that don’t work on Wall Street falls to 3rd world level?
Really?
Tax and regulatory barriers? Sorry Wall Street, but you’ve robbed the lower and middle classes of every spare penny, and there is a $2T a year SS and MC bill coming. You are the ONLY guy at the table with any money, so don’t be shocked when the waiter sets the check in front of you.
We’ll just let them have all the money, and let them blow bubbles and run stock and commodity scams day and night, while the standard of living of the 299 million that don’t work on Wall Street falls to 3rd world level?
I believe that’s the plan.
“Do these guys really think that Main Street is going to accept Mexicoification of the USA? Really?”
Main Street seems to be accepting it very meekly thus far…
“I believe that’s the plan.”
+1.
Wells Fargo settles mortgage-abuse case for $85M
Wells Fargo to pay $85 million to settle charges that it steered people toward risky mortgages
WASHINGTON (AP) — Wells Fargo & Co. has agreed to pay $85 million to settle civil charges that it falsified loan documents and pushed borrowers toward subprime mortgages with higher interest rates during the housing boom.
The fine is the largest ever imposed by the Federal Reserve in a consumer-enforcement case, the central bank said Wednesday.
Wells Fargo, the nation’s largest mortgage lender, neither admitted nor denied wrongdoing as part of the settlement. The bank agreed to compensate borrowers who were steered into higher-priced loans or whose income was exaggerated.
The Fed alleged that Wells Fargo inflated borrowers’ incomes on loan documents to qualify for mortgages they otherwise couldn’t afford from 2004 until 2008. Wells Fargo sales personnel also pushed borrowers toward higher-interest, subprime loans, even though they were eligible for lower-interest mortgages, the central bank said.
Between 3,700 and roughly 10,000 people could be compensated under the settlement, the Fed said. The payments will likely range from $1,000 to $20,000.
The alleged actions by Wells Fargo are similar to accusations made against many subprime lenders during the housing boom. Hundreds of those smaller lenders went bankrupt when the housing market collapsed in 2007.
Millions of homeowners who took on subprime loans during the housing boom have since lost their homes to foreclosure.
Does this settlement have something to do with (correct me if I’m wrong) the suit that the City of Baltimore filed a few years ago?
ISTR that there was a lot of WF subprime lending targeted at minorities in that city. And some of those folks could have qualified for prime rate loans.
“Rather than go from $34 B in profit to $33 B in profit, they would cut $1 B in benefits and jobs and maintain their $34 B in profit that way.”
“That’s exactly what HP did in 2008. 5% pay cuts across the board, and no, they were not temporary. I heard through the grapevine that the new CEO will restore the reduced pay, but only for top performers.”
Back in 2003ish when SarbOx required that ESPP and stock options had to be counted as costs for income statements, the company I worked for got rid of the ESPP that let you use upto 5% of your pay to buy stock for upto 20% below market. It was about a 1% pay cut to most employees. Of course, we were not compensated in any way for the loss of this benifit.
That same year, the top executives got massive pay increases… like 50%. But, everyone below VP got hit with a “no pay increase” policy. We were like, WTF?
Oh, we’re told through HR, options were a big part of the pay and with SarbOx those were eliminated so they needed raises to compensate.
Someone had done their homework and come prepared. The money saved by the ‘no raise’ policy (2% x 80K x 700 employees) was almost exactly the extra $1 million that was being handed out to the to 3 people that run the company (CEO, CFO, CTO).
So, we got no raises so that they could move $1 million in executive pay that had been “off book” to “on book” without hurting profitability.
Our best people started to leave. So, a pay raise for top performers went through. About 2%, but for only about 10% of employees.
So…. the next quarterly bonus… yep… despite record revenue and hitting our profit targets, no bonus. Why no bonus? It was the only way they could still hit profit targets after the pay raises to top performers.
Give with one hand and take away with the other.
Needless to say, the trickle of best people leaving turned into a downpour.
How did they fix it? They cut 20% of employees, shut down development on the next gen product line, and just used the cash on the balance sheet to buy the assets of another company that was in bankruptcy.
That actually worked since our next gen product was a pile of dog doo.
“About 2%, but for only about 10% of employees.”
This is becoming the norm at a lot of companies: Getting the dogs to fight over the table scraps.
And as Dilbert’s pointy haired boss put it so eloquently last Sunday, there’s no point leaving for greener pastures, as it’s no different anywhere else.
And as Dilbert’s pointy haired boss put it so eloquently last Sunday, there’s no point leaving for greener pastures, as it’s no different anywhere else.
That may be mostly true, but if you really are worth more you can go to a different company and get screwed the same way but at a higher rate of base pay.
And a new place gives you the company of co-workers you don’t hate yet.
20 years ago I got out of the Navy and entered the software industry. At that time, every company gave reviews and raises on your anniversary date. This way, manager had to do about 1/12th of their employees per month. Much better than the Navy’s system where everyone got their review on the same date making for one hecka busy month.
Well, I’ve now seen company after company after company switch to a “everyone gets reviewed at the same time” system. It is the only way that HR can put hard caps on raises and promotions. Thou shalt have no more than 5% of your employees rated a “significantly exceeds expectations”, no more than 20% “Exceeds”…. and at least 10% must be “Fails to meet”. There has to be a few people you’d like to get rid of, right?
Yet another reason to avoid Corporate America with their forced ranking distribution system, which is yet another way to get the dogs to fight over the scraps.
How did they fix it? They cut 20% of employees, shut down development on the next gen product line, and just used the cash on the balance sheet to buy the assets of another company that was in bankruptcy.”
Then your company will go out of business sounds like freescale but I’m just guessing
I was having a chat with my sister and brother-in-law about Social Security. She’s 46 and he’s 50. We all know there have to be cuts, but I want them to be now and BIL likes the Republican plan of phasing them in over 20 years.
Why?, I ask. Because those already retired do not have to save for retirement that they are already in, but all of us still in the workforce can start spending less and saving more.
To which I ask, and what happens to the economy when everyone is spending less. And what do you do with the money you are not spending if no one is coming to the bank to borrow money becasue EVERYONE is spending less than they are making?
We doesn’t get it.
So, I explain.
Your money that you received as a pay check was created when someone went into the bank and borrowed it. They spent it into the economy where it eventually ended up in your employeers account, who gave it to you. No one borrowing money, no money.
Net savings is only for countries with a net trade surplus. Net trade deficit nations must have a negative real savings rate or soon, all the money has flowed out of the econmy and it stops functioning….
He couldn’t put his finger on what I had wrong, but he was sure I was wrong as it just doesn’t make sense that not everyone can be spending less than they earn.
So, I try again…. You spend less than you make. What do you do with the extra money? “I put it in the bank”, he says. And the bank does what with it?, I ask. “They loan it out to others”. NO!!! Everyone is spending less than they make, so no one is borrowing any money. “So, it just sits in the bank.”, he says. And the economy will function with more and more and more money sitting in the bank and less and less and less money being spent?
He got up and walked off. I’m still not sure he got it, or just didn’t want to know the truth.
MONEY is someone elses promise to pay it back. People work for it so they can pay back their debts. But if everyone actually did try to pay it back at the same time, there’d be no money left in the economy.
You gotta hand it to the Banking Clan. Unless we collectively get into hock and owe them real world goods and services in exchange for their funny money the system shuts down. Heads they win, tails we lose.
but all of us still in the workforce can start spending less and saving more.”
sure we can. I beleive the spending less part anyway
Blughghgh. There’s a support staff person that has been showing up for work even though they were laid off a month ago.
Is it George Costanza?
Are you serious??? Do you know them well enough to guess whether this is due to:
- deep, deep denial
- nothing better to do with the day
- loving work that much
- twisted sense of humor, e.g. an office-space-like move
- other?
I’m really, really curious, Muggy…
(posted response earlier, but no sign of it—did it fall in the great huge circular bit-bucket?)
Fascinating, Muggy; any idea why?
Mom and Pop on Main Street are giving the banksters some competition — gotta love it!
News Hub: Investors Seek Higher Returns by Lending
July 20, 2011
Across the U.S., some mom-and-pop investors are yanking money from retirement accounts and safe but stingy savings to take on the risk of becoming “hard-money” mortgage lenders. Dawn Wotapka explains.
Mom and Pop on Main Street are giving the banksters some competition
Game changer for banks on many levels? Is this long term huge?
Why would it not be?
I don’t see the competition here. Mom & Pop can’t compete with the Fed-gov-subsidized rates that the banksters can offer.
Hard-money lending has been around a long time, but there is a limited market for its above-normal-market rates.
Higher rates provide a risk premium against above-normal-market default risk.
If China slows, are we all doomed by implication?
July 21, 2011, 12:09 a.m. EDT
China manufacturing survey points to contraction
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — HSBC’s China “flash” manufacturing Purchasing Managers’ Index fell to a 28-month low in July, indicating activity is now beginning to contract in an economy that’s seen as a barometer of global growth and a price-setter for many commodities.
…