Bits Bucket for August 21, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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One interesting recent development:
You hardly even hear the MSM utter a word about real estate investing, now that the focus has myopically shifted to the spectacle of panicked investors racing towards the exits from the stock market’s burning theater.
Small investors fleeing stock market
Crisis mentality takes hold amid worries of renewed recession
By John W. Schoen Senior producer
updated 8/18/2011 4:04:42 PM ET
If the recent wild leaps and plunges in financial markets have prompted you to cash out your stocks, you’re not alone. Individual investors are bolting for the exits.
Thursday’s big sell-off, which saw the Dow Jones industrial average move by triple digits for the ninth time this month, was the latest evidence of a crisis mentality that has taken hold on global financial markets, turning the usually quiet month of August into a nail-biter for small investors. A lot them have just one word for their broker: “Sell.”
“You’re talking about money exiting the market en masse and it’s completely wanting to get out stocks agnostic of sector,” said Art Hogan, a managing director at Lazard Capital Markets. “What we’re having right now is panic selling.”
The stampede began this month, following the spectacle of a U.S. Congress pushing the country to the brink of self-induced default. Since then, the flood of money out of stocks has accelerated as investors fret about European banks shaken by a debt crisis, a political stalemate in Washington and fears of another recession.
Terrified investors yanked more than $40 billion out of stock and bond funds in the week ended Aug. 10, the latest data available from the Investment Company Institute, the mutual fund industry’s trade group. That was the biggest mutual fund cash-out since mid-October 2008, when investors panicked following the collapse of Lehman Bros. and the virtual shutdown of the credit markets.
For now, much of the money being pulled out of stocks is flooding into money market accounts, which have swollen by more then $34 billion in the past few weeks. Nervous investors have also bid up the price of gold to a record of more than $1,800 an ounce.
Last week, trading in one popular fund that invests in gold surged to 55 million shares in a single day, more than three times the average daily volume so far this year. Since July 1, the price of gold has surged 23 percent.
For many investors, fears are fresh of the stock market collapse that followed the 2008 financial meltdown, when the Dow fell more than 30 percent in less than six months. With Europe’s banks bracing for fallout from the euro zone’s debt crisis, investors fear another “Lehman moment,” when problems at one bank sparked a panic that spread rapidly throughout the system.
“There’s a great possibility, I think, of that happening,” said Harvey Miller, an attorney at Weil, Gotshal & Manges who is working on the Lehman bankruptcy. “I think there’s a lot of fear in the economy today, and fear causes people to panic.”
…
When logic fails, economists go vague about “fear” and “panic.” Well, yes, it’s fear, but it’s justified fear:
1. American consumer is milked dry.
2. Overseas consumers, which were supposed to buy all the stuff after the Americans were milked dry, are not buying stuff because the overseas consumers don’t have a retirement safety net to count on (hat tip to housing wizard.)
3. There are no more costs to cut out of the existing structure. Most of it was cut about 5 years ago.
4. The last resort to cut cost: tax breaks and shady accounting, are exhausted.
5. No more cards in the bubble hand.
1. = deflation. (no money)
2. = deflation. (no money due to no retirement net)
3. = deflation. (no more way to cut costs)
4. = deflation. (exhaustion of tax breaks and shady accounting)
5. = deflation. (bubble is over, repaced by a contraction)
“It’s fear, but it’s justified fear.”
Fear brought on by the forces of deflation.
At first I had a hard time believing your everything-is-deflation theory, but now I’m starting to wonder. Maybe globalization HAS run its course. Yes, there is still a huge supply of overseas labor, but if demand for the products is saturated, then even more supply won’t cut costs. Kinda like trees not growing to the sky.
I think the fear with deflation is that the upper classes who depended on inflation will now have to work for their money, just like the “working class.” And yes, that should be scary.
I think the fear with deflation is that the upper classes who depended on inflation will now have to work for their money, just like the “working class.” And yes, that should be scary.
You nailed it, oxide.
Bring it on if you’ve got cash -
‘…“fear” and “panic”…’
Don’t forget Keynes’ ‘animal spirits’…
So, what is the difference between “fear” and “panic”, and “rational investment decision”?
All the evidence shows that “investing” on Wall Street most closely resembles “investing” in your local casino. All of the signs indicate that the “winning streak” has ended. But it’s considered “panic” when the player wants to cash in his chips.
We’ve done such a good job turning black and white into a million shades of gray, that everybody is walking around in a fog, and can’t take anything at face value anymore.
‘But it’s considered “panic” when the player wants to cash in his chips.’
I believe the rate and volume of investors ‘cashing in their chips’ has quite a bit to do with it. Obviously if everyone tries to cash in their chips at the same moment, there will, be a shortage of chips buyers to provide for the cash sides of these transactions — a veritable run on Wall Street’s stock market casino bank, if you will…
“…everybody is walking around in a fog…”
That’s just the example of a unbalanced economy when
you have flows of money going from one bubble to the next ,while long term productive investments don’t take place .Than all of a sudden people seek safe havens and
whatever bubble market crashes .
The Value of something being based on how much money is cheerleaded into it ,verses its current and future value is
folly ,unstable ,to many losers and to few winners .To was not what the productive use of capital or investment was
suppose to be all about .
If I did not want to keep so much savings bonds, T-bills, cash, and gold, I would flee into oil exploration companies and fertile land with plenty of water sources to grow food.
I just cashed out a stock fund. I put in 10,000 USD into a Vanguard S&P 500 index fund during a market dip about ten years ago. When I cashed out recently, I came out with 11,000 dollars. Works out to around 1% interest a year. It was negative most of that time.
Let them eat cake.
I’m trying to sell some stuff on Criagslist. What complete freakshow that has turned out to be.
FPSS, let me get this straight: all I gotta do is lay low and stuff my mattress with mellow green, and all will be o.k. in 15 years?
I like it.
In the meantime, I have discovered that basically every piece of furniture I purchased for my kids gives off too much formaldehyde and/or has been recalled. All pine from here on out.
I’m trying to sell some stuff on Criagslist. What complete freakshow that has turned out to be.
We just sold an electronic piano (not a keyboard like the ones you see at CostCo) on Craigslist, and sold it for about 70% of what a new one costs.
We were pummeled by inquires offering about 10-20% of the new price, which usually came with pleas of “it’s all I can afford and I really need it for …”. My favorite one was one guy who claimed he was adopting a kid and he wanted to give him a piano. I have little doubt that these were mostly scammers who would then turn around an resell the piano at a higher price.
Or better yet you agree on $150 but they show up with $120 saying its all i got…
That hasn’t happened to me yet, but then again I’ve only sold a few things on craigslist.
Welcome to the bargaining of the free market place. It’s been like that for a long time. the buyer has his poker hand, you have yours. Even in a closed society, like the Soviet Union between 1917 and the late 1980s, the black market was rife with people trying to outwit each other for the best deals.
“Oh I hate that! I think I will prefer to live in North Korea!”
“I have little doubt that these were mostly scammers who would then turn around an resell the piano at a higher price.”
The way a free market works is that you can ask (require) whatever price you want for something you wish to sell, and prospective buyers can offer to pay you whatever they wish. As seller, you can choose to pay attention to ridiculous stories about people who can ‘only afford’ to pay 10%-20% of your asking price, or you can choose to ignore them and wait for a better offer. You can choose to wait as long as you want to get 100% of your asking price, or never sell it if you never get any offer which is high enough for you.
This is the beauty of a free market in proper working order: Nobody has to do anything they don’t want to do; all trades require open agreement between buyer and seller.
Of that I have no doubt. What surprised me was the sheer number of scammers who each had his own sob story of why I should sell him a $1100 piano (that’s what new ones cost) for $200. I guess it comes with the territory on Craigslist.
I did sell it for $750 to a serious buyer. And it didn’t take long to sell either. Of course, I was in no hurry to sell it, but it did sell in just a few days.
“I have little doubt that these were mostly scammers who would then turn around an resell the piano at a higher price.”
Have a yardsale. The ones pacing back and forth in driveway 1/2 an hour before you open the garage door are most likely resellers. I sold a lamp purchased in the 70s (by my parents)for $75 to one of those guys. It was hilarious. He made a beeline right for the thing and didn’t blink when I mentioned the price. Kind of wished I’d priced it higher as he freely admitted he had a client that had been looking for something like that for a few years. Now I also have to admit it’s very likely his client wouldn’t have been caught dead at a yard sale. So that sale might have never happened w/o him.
If you don’t do your homework and ask a high enough price to reflect what a “flipper” could turn around and sell for, then it is your own fault.
I once tried to sell a car without first looking up the Blue Book Value. Turns out I was about $500 too low; I got suspicious upon returning from work that day to notice my telephone message box overflowing with inquiries from interested prospective buyers. After politely declining all of these lowball offers and repricing the car to reflect current market value, I had no trouble getting an offer that included that missing $500 from my initial offer price.
When I sell anything of significant value on craigslist, I always put something in the text which states “all offers must be made IN PERSON after viewing the item. I will not respond to any others.” Then, when some keyboard cowboy sends some lowball offer, it goes straight into the trash.
“This is the beauty of a free market in proper working order: Nobody has to do anything they don’t want to do;”
Which is why the “free market” will always be a childish fantasy.
People HAVE to eat.
They HAVE to have a place to live.
They HAVE to have clothing.
In short, they HAVE to pay bills just to stay alive. That fact ALONE creates a bias.
We are talking about apples and oranges, as my comments were with regard to discretionary sales on Ebay, not basic necessities like those you mention.
That said, there is no reason the “free market” model can’t accommodate the “necessities” case; it’s just that if the prospective buyer can’t meet the seller’s “reservation price” in this realm, ugly consequences result for the buyer. But that doesn’t mean the free market is not working. They don’t call economics the “Dismal Science” for nothing…
Sorry, but you spoke in general terms and frankly, either the “free market” encompasses ALL scenarios or it doesn’t because just one exception negates the concept.
I will explain yet once again; there will NEVER be a “free market” as people a WILL game and manipulate the system, especially when it comes to needs.
“Free market” is nothing but code for “free to eff you up the rear without consequences, market”.
“…free to eff you up the rear without consequences, market…”
I would encourage you to move to the Soviet Union, where their free-market alternative economy resulted in hours of each week’s potentially productive time waiting in line for rations of bread, but their economy and country collapsed 22 years ago.
P.S. I suggest you do a bit of reading on how free markets are ideally supposed to work before you trash the concept. I concur that many real world obstacles stand in the way of them working as well as the text books suggest they should, but you seem to prefer killing the goose that lays golden eggs rather than nursing it to better health so it can lay more eggs.
Soviet Union? Economic collapse? Well thank god we’re not in some kind of really deep and long recession or anything, with a few TRILLION dollars of debt, that’s setting new records not seen since the Great Depression, right?
“Ideally” is bullcrap. Ideally is a word right next to “supposed to” and “should be”. All of them dissembling fallacies. The real world operates with people who don’t follow the rules and make life hell for everyone else, making “ideally” useless at best and nothing but time wasting academic bullshit on most days.
Even fundamental physical laws don’t operate on “ideally”.
Have to agree with eco here, which is why I support capitalism for “wants” and socialism (controlled by representatives of The People, who are 100% transparent and accountable to the majority of citizens) for “needs.”
Can anyone who understands kindly explain the appeal to me of a fund with a seven-day taxable yield at 0.02%?
Does this mean an investor with $10,000 in such an investment would receive a yield of $10,000 X 0.02% = $2/week from this investment? Or would that be the annual return? And taxes still have to be taken out, making the after-tax return less than $2.
No matter; where is the attraction, compared to, say, putting your money in an FDIC-insured bank account?
MUTUAL FUNDS
AUGUST 18, 2011
Rush Out of Long-Term Mutual Funds
By JOHN KELL
Long-term mutual funds had estimated outflows of $40.29 billion in the latest week, by far the sharpest outflow reported this year, as investors pulled money from each fund category, according to the Investment Company Institute.
The outflows for the week ended Aug. 10 were sharpest for U.S. and foreign equities. The steep withdrawals occurred during a volatile week in global markets after Standard & Poor’s lowered its rating on the U.S. government on Friday, Aug. 5.
ICI has reported a mixed performance from the mutual funds it tracks in recent weeks, as concerns about the global economy, U.S. debt levels and the euro-zone debt crisis continue to rattle investors.
For the week ended Aug. 10, equity funds had outflows of $30 billion, compared with outflows of $13.01 billion in the prior week. Investors withdrew $23.49 billion from U.S. equities and pulled $6.51 billion from foreign funds.
Meanwhile, ICI reported bond funds had outflows of $4.38 billion, compared with week-earlier outflows of $2.87 billion. Investors pulled $3.24 billion from taxable funds, while outflows from municipal funds totaled $1.14 billion.
Investors pulled $5.9 billion from hybrid funds after prior-week outflows of $1.09 billion. Such funds can invest in both stocks and fixed-income assets.
Separately, assets in money-market funds climbed $26.6 billion in the week ended Tuesday, as strong inflows to government funds more than offset tax-free and prime-fund outflows, according to money-market information provider iMoneyNet.
So far this year, iMoneyNet has mostly reported weekly outflows, a trend that has helped push assets down to 2007 levels. Withdrawals have been more common in recent weeks as concerns about the euro-zone debt crisis and a weak economic outlook in the U.S. have rattled investors.
Investors have added money to money-market funds the last two weeks, totaling $87.88 billion on an unrevised basis. Still, the assets haven’t fully recovered from a $103.21 billion tumble in early August, during the week leading up to a deadline to approve a higher U.S. debt-ceiling limit.
For the week ended Tuesday, total assets in money-market funds jumped to $2.615 trillion, iMoneyNet said.
Its reading on seven-day yields for taxable money-market funds held steady at 0.02%. Last week, the Federal Open Market Committee decided to keep key rates unchanged and hold them at low levels until 2013.
…
FWIW, I moved all of our money out of MM funds a few months ago. Sitting in 0% non-interest bearing checking accounts, because there is unlimited FDIC protection there until 2013.
This is the suckiest time for people who just want to preserve capital, much less make some money on it. Apparently, the Fed doesn’t seem to understand the linkage between their low interest rate policies and all the risk-taking that has caused our precarious financial situation.
“This is the suckiest time for people who just want to preserve capital, much less make some money on it.”
Build Your Own ‘Lazy Portfolio!’ 6 Rules
Yes, you can build a million dollar nestegg, its simple, you can do it
ARROYO GRANDE, CA. (MarketWatch) – “Investing should be dull,” says Nobel Economist Paul Samuelson, “investing should be more like watching paint dry or grass grow. If you want excitement, take $800 and go to Las Vegas” or Wall Street. Investing really is simple and easy, anyone can do it. You can. Here’s how.
Several years ago I started tracking the best portfolios I could find in America, simple portfolios being used by Nobel Prize winners, millionaires, conservative portfolio managers, neuroeconomists as well as average Main Street investors. We even found some in books like Investing for Dummies and The Idiot’s Guide to Investing.
We discovered something amazing. They were all saying the exact same thing: All you need is a simple, well-diversified portfolio of just three-to-eleven funds, low-cost, no-load index funds that will create a long-term winner through bull and bear markets. And you do it with no market timing, no active trading and no commissions. “Lazy Portfolios” are that simple. So what about the other thousands of stocks, bonds and mutual funds being hustled by brokers? Forget them!
…
But the lazy funds or portfolios own the “other thousands of stocks, bonds & mfs”! Even the lazy funds are prone to lose quite a bit during a severe downturn.
“This is the suckiest time for people who just want to preserve capital, much less make some money on it.”
IMO these are the BEST times to preserve capital and make some money on it.
Look around and see what is going on in the markets, especially the stock market; There are clearance sales going on everywhere. Those who believe in the philosophy of buy low, sell high are witnessing the grand set up of a enormous buying opportunity. Those people WHO HAVE THE CASH are going to be given the opportunity to buy at great discounts assets from those WHO NEED THE CASH.
The folks who equate Price with Value are going to sell out as the price of what they own declines because they interpret these price declines as declines in values.
This is crazy if one stops to think about it.
In few other areas do people think this way. Usually when clearance sales are offered people step up and become buyers. In the stock market when clearance sales are offered people step up and become sellers.
This is nuts but nevertheless there it is.
They are sellers in down markets because of leverage.
CA Renter, if you are leery of FDIC limits, why don’t you consider T-bills? Ladder them so that some mature within four weeks regularly. The FDIC does not apply to T-bills because you are guaranteed for every penny you have in there, even if much more than $250,000.
I like 52-week T-bills. I have them all laddered so that I have some maturing every four weeks. Yes the yield on them sucks. But they are safer than bank accounts.
You can quickly change the financial institution where the matured funds go through. Or you can have cash sitting in treasurydirect’s C of I that you can use as the place where your redemptions and purchases, and yields go through, avoiding a bank.
Quick question BIll; are they at least keeping up with inflation or even close? If so, I’d say you have a good plan there.
No the government securities are not keeping up with inflation. 36% of my asset allocation plan is biased toward deflation. T-bills, TIPS, municipal bonds, series I bonds, and what few notes I have, as well as cash are all geared toward deflation. 50% of my asset allocation plan is geared to moderate inflation. The remainder is protecting against hyperinflation.
My net worth depreciated by 8% in the last five weeks. But I’m not concerned with short term intervals. I think we have more probability of inflation ahead.
Thanks, Bill.
We already have T-bills, but I want to have very liquid and ready cash in the event we find a house (or??) to buy.
.02 a week = 1% a year.
Borrow $100B from the Fed at .25%, and invest it at 1% for a year. You just made $750 million. The risk is the Fed increasing interest rates out from under you. Oh, wait. Ben just promised he won’t be raising rates rates until 2013 at the earliest. Risk gone!
You don’t care that you aren’t even keeping up with inflation since it isn’t your $100B anyway. That is the problem of those suckers that are trying to protect thier nest eggs by selling stocks and putting their money in safe FDIC insured bank accounts.
That is the problem of those suckers that are trying to protect thier nest eggs by selling stocks and putting their money in safe FDIC insured bank accounts ??
Well, this “sucker” knows one thing for sure…When I wake up each morning, and go online, my cash is still there resting peacefully to be awoken and used at my leisure or in a time of need….
And every year, its purchasing power gets chunked away, chunked away, chunked away…
its purchasing power gets chunked away, chunked away, chunked away…??
Only if you allow it to…Its in a bank, not buried in a tomb…Its there and available to be deployed in a way that is profitable…Hell, look at the cash Corporate America is sitting on…I don’t think they are worried about it getting “Chunked Away”…They hoard it a keep it as dry powder i.e. “Birkshire”…
I get your point by the way…Idle cash can erode..I am just suggesting that it does not necessarily have to…
Plus one.
When I wake up each morning, and go online, my cash is still there resting peacefully to be awoken and used at my leisure or in a time of need
Of course those savings are guaranteed by government programs, by a government that is basically insolvent.
Still, it’s the best choice out there as it’s only being slowly eaten away by inflation (unless you’re waiting to buy a house)
There ya go! The real significance of the Fed’s recent announcement is that Megabank, Inc is assured that it can continue to borrow from the Fed at rock bottom rates and lend out at “market rates” without having to worry until at least 2013 about losing its ability to play this game.
There was a long period of time when I thought the stock market was systematically manipulated to contain normal volatility.
Nowadays, I no longer believe that is the case. To the contrary, the risk premium is currently in the process of getting priced back into the stock market. It may not seem like such, but this is actually part of the process of recovery from what Alan Greenspan famously referred to as
a “protracted period of low risk premiums.”
Volatile Stocks to Leave Lasting Scars on Fund Investors’ Psyche
By Laura Keeley - Aug 18, 2011 1:49 PM PT
Investors may be getting used to the volatility, which isn’t necessarily a good thing, said Lee Ann Knight, a financial adviser in Bedford, Massachusetts.
Photographer: Scott Eells/Bloomberg
Brad Durham, managing director of research at EPFR Global in Cambridge, Massachusetts, said retail investors are exiting funds while institutions are modestly adding to their holdings.
Photographer: Scott Eells/Bloomberg
Last week’s record volatility in U.S. stocks ended after four days. The anxiety it instilled among mutual-fund investors may linger for years.
Investors pulled a net $23.5 billion from U.S. equity funds in the week ended Aug. 10, the most since October 2008, when markets were reeling from the collapse a month earlier of Lehman Brothers Holdings Inc., the Investment Company Institute said yesterday. The period tracked by the Washington-based trade group included three of the unprecedented four consecutive days in which the Standard & Poor’s 500 Index rose or fell by at least 4 percent.
The roller-coaster ride was unnerving for fund investors who have already endured the bursting of the Internet bubble in 2000, a 57 percent collapse in the S&P 500 Index (SPX) from October 2007 to March 2009 and the one-day plunge in May 2010 that briefly erased $862 billion in value from U.S. shares. The debacles, combined with falling home prices, unemployment above 9 percent and a lack of trust in government to bring down spending, may sour individual investors on domestic stock funds for an additional three to five years, according to Andrew Goldberg, a market strategist at JPMorgan Funds in New York.
“You can’t keep having bombs, so to speak, go off,” Goldberg said in a telephone interview. “If the second you walk outside another one goes off, you’re going to stay inside for longer, and that’s what’s going on.”
…
I like how they call plummetting stocks “volatile”. To me volatile means unpredictable, as it goes up and down in a seemingly random fashion. Stocks are cratering, as in going down.
Apparently multinationals aren’t as immune to weakness in the US economy as their CEOs keep saying they are, that a global economy won’t necessarily lift their boats and that good paying jobs for J6P do matter.
Here’s a tip for our captains of industry: stop the offshoring and hire locally, and you will once again have customers. Such a simple concept and they refuse to see it.
“Stocks are cratering, as in going down.”
Good point, and one that crossed my mind as well.
I can’t recall any MSM articles on investors complaining about ‘volatile’ housing prices back when LA-area housing was increasing at over 20% a year, or about ‘volatile’ stock prices back when the NASDAQ was racing towards its all-time high before the onset of the Lost Decade of the 2000s.
Exactly. Stocks are always “volatile” as their prices always zig zag. Sure, sometimes the peaks and valleys in those zig zags are more pronounced, but what mattered was the trend, and right now the trend is down, down, down.
“… and right now the trend is down, down, down.”
IOW poof, poof, poof. And as each poof happens somebody’s money is poofed right along with it.
Money that is poofed will not be around to circulate. Money that is not around to circulate will not be available for people to use to buy things that are for sale, which means a lot of things will not be sold.
No matter what the price - a higher price or a lower price - if people do not have the money to buy then things will not be sold.
Assuming that J6P used his stock holdings to fund purchases, which he didn’t. Even if he owns stocks or mutual funds, it’s probably in his 401K, which means the losses are unrealized.
The under $500 a week crowd typically doesn’t own stocks, so the stock market crash is a non issue for them, just as a bull market is a non issue for them. Either way they are already poor and that situation won’t change.
And I don’t think these stock drops will affect a richie’s decision to buy a new Benz.
J6P doesn’t need to use his stock holdings to fund purchases, it’s enough that he sees the money he once thought he had vanish into thin air.
When lots of money goes poof then the confidence of one’s security also goes poof and it is replaced by fear.
And people who are full of fear regarding money are not going to be heavy spenders.
J6P doesn’t need to use his stock holdings to fund purchases, it’s enough that he sees the money he once thought he had vanish into thin air.
But like I said, most J6Ps don’t own stocks or have 401Ks, so I don’t see how it would affect them. The under $500 a week crowd certainly doesn’t own any, so I don’t see how it would affect their spending either.
If its going to affect anyone’s confidence, it will be the upper middle class. That’s about it.
“But like I said J6Ps don’t own stocks or have 401Ks, so I don’t see how it would affect them.”
It effects them because we live in a consumer-based economy. J6P and others who depend on consumers consuming are screwed if these consumers stop their consuming.
J6P doesn’t have to be an owner of a poofed out 401K or and IRA or stocks or whatever - it enough that the guys who do own such things are going to cut back their spending.
J6P DEPENDS on this spending. If the spending doesn’t happen the J6P is screwed. And the spending won’t happen if the people with money - the ones who do the spending - see their money vanish right before their eyes.
I don’t know of many professionals in their 40s and older who do not invest in their company’s 401ks. Even fewer 50-somethings or older who do not invest in 401ks. Yet most of us are taking advantage of Bush II’s 2001 tax cuts. The 50+ catchup for 401ks and IRAs was implemented in Bush’s 2001 tax cut and I am taking full advantage of it. That is proof that the 2001 tax cuts were for the small investor too.
‘Stocks are always “volatile” as their prices always zig zag.’
Perhaps you overlooked one of my comments above:
‘There was a long period of time when I thought the stock market was systematically manipulated to contain normal volatility.’
There may be no way to test whether it was due to manipulation or market forces, but if you look at stock price movements (e.g. daily movements in the Dow Jones Industrial Average) during Hank Paulson’s tenure at Treasury leading up to that last unpleasant stretch during 2008, there was a protracted period when stocks always zagged, as in they either stayed level day-in, day-out or moved up, for months on end. And there were virtually no large price swings such as those we have seen in the post-debt ceiling compromise period.
IOW poof, poof, poof. And as each poof happens somebody’s money is poofed right along with it ??
LOL….
I don’t know of many professionals in their 40s and older who do not invest in their company’s 401ks.
I don’t count those folks as J6Ps. But according Bizweek the participation rate for those who are offered a 401K at work is 80%. A lot of workplaces don’t offer 401Ks and a lot of folks are self employed and don’t have one either.
According to the US Census Bureau, the average retirement account balance is is about 50K, but the median balance is only $2000.
Most Americans have squat saved up.
That is proof that the 2001 tax cuts were for the small investor too.
A point that misses the point…which may be the point.
The rich guy gets a 20% tax cut, the middle-class guy gets a 5% tax break.
This is also proof that the 2001 tax cuts were for the middle-class guy too.
Money that is poofed will not be around to circulate. Money that is not around to circulate will not be available for people to use to buy things that are for sale, which means a lot of things will not be sold.
The same thing happens when money is redistributed from the middle-class to the super rich. It has happened. It is not just theory anymore.
USA has plenty of “money”. It’s just concentrated in too few’s hands and needs to be redistributed back to levels seen when America’s middle-class was strong.
“Most Americans have squat saved up.”
Which means they will not have the money to buy things as their wages or hours or (gasp) their jobs are cut.
Which screws two catagories of people:
1. It directly screws the people who have squat saved up and have reduced income due to less earnings, and …
2. It indirectly screws the people whose earnings depends on the spending of the people who have squat saved up and have reduced income due to less earnings.
As this contraction rolls on the folks in catagory 2 will join the growing ranks of those in catagory 1.
“J6P doesn’t have to be an owner of a poofed out 401K or and IRA or stocks or whatever - it enough that the guys who do own such things are going to cut back their spending.”
Trickle down shut down time…
“Assuming that J6P used his stock holdings to fund purchases,…”
First off, J6P doesn’t have stocks…
“First off, J6P doesn’t have stocks…”
Exactly. J6P is living paycheck to paycheck, with nothing to spare. He probably has $17.86 in the checking account- enough to get hammered on a 12-pack of sh!tty beer.
Right on Colorado . How about decent wages for purchasing power also .
They thought that emerging markets would be their new growth area ,and middle class going into low purchasing power by being tapped out with wages not keeping up with inflation and a jobless recovery would not touch them .
Is anyone else wondering what I am as I review the week’s countless lurid tales of panicked investors fleeing the stock market:
Will the stock market investors turn to residential real estate investing as a safe haven, just as they did during the aftermath of the tech stock collapse in the early-2000s? Or is gold now the only remaining safe refuge?
Investors flee stock funds at rate not seen since 2008 panic
By Adam Shell, USA TODAY
Updated 3d 11h ago
NEW YORK — The market turmoil sparked by the downgrade of the USA’s triple-A credit rating caused mutual fund investors to sell U.S. stock funds at a rate not seen since the financial crisis in October 2008.
In the week ended Aug. 10, which included the two days leading up to the Standard & Poor’s downgrade and the first three trading days that followed, net outflows from domestic stock funds were $23.49 billion, the Investment Company Institute says. That was the biggest weekly outflow since Oct. 15, 2008, just four weeks after the bankruptcy filing of Lehman Bros. almost toppled the world financial system.
Investors’ decision to take a more conservative stance isn’t surprising, given the historic price swings in the Dow Jones industrial average, the nation’s first-ever debt downgrade, a patch of weak economic data and negative headlines out of Europe, says Quincy Krosby, market strategist at Prudential Financial.
“When you see swings of that magnitude, it makes investors nervous,” Krosby says. “They remember 2008. They always feel like they are the last ones out. This time they were doing what hedge funds were doing: getting out while they can.”
…
Buy the dips?
It appears that yesteryear’s dips buyers are too preoccupied with racing for the exits to buy much of anything these days.
At least until QE3 shows up.
HP is currentky trading with a P/E of under 6, which seems like a historical average. Something tells me that HPQ (will they drop the Q from their ticker name once the dump the printer division and go back to HWP?) will continue to follow the rest of the market down. I can’t help but wonder how low it will go.
During the 2008 crash HPQ was also in this price range but zoomed back up to $50 within 9 months. I’m tempted to buy some, just not quite yet. I can’t help but think that while 23 is a relatively low price that it could go down into the teens, but that’s what I thought last time and it didn’t happen.
I remember when HP was the crown Jewel in Silicon Valley…”The HP Way” was the saying…Transformed the relation ship of management & employees without unions…
I have a small amount of money in HPQ. However, when they said we just give up and will just try to copy IBM because we dont know what the hell we are doing, I lost confidence in their managment. I am all for forward thinking restructuring to improve profitiabily, but not the let’s follow that guy mentality. Every one of their past and forward looking acquisitions seems to have placed them on the losing side of the table. That said I did not sell yet, but will if we get a bump.
Dave Packard mentioned in his auto bio “The HP Way” that he didn’t want HP to be a “hire and fire” company. And it was that way until he and Bill Hewlett died. Carly announced the first mass layoffs just months after Bill Hewlett died.
During the Bill and Dave days if business got slow they would implement the “9 day fortnight”. Everyone took a temporary 10% pay cut and got every other Friday off. It was a powerful loyalty builder as employees watched their friends at other companies get laid off.
However, when they said we just give up and will just try to copy IBM because we dont know what the hell we are doing, I lost confidence in their managment.
Mark Hurd’s biz plan was simple: Buy other companies and cut costs. He mostly bought smaller companies (usually on the cheap) but he goofed when he bought EDS. IIRC his plan was to lay off about 25K EDS’ers to boost profits. There was also hope that EDS would move more HP servers and storage systems. It didn’t happen.
A thought that crossed my mind once is that had their current management been in charge during the old days that the printer business would never have happened as they want instant profits. Instead they would have OEM’d printers from some 2nd tier printer vendor and it would ever have become profitable business unit it became.
Of course this mentality isn’t limited to HP. One of Disney’s most profitable units is their themepark biz. If it didn’t already exist I doubt that today’s Disney would give it a shot. It happened because Walt Disney took a big chance (IIRC he even mortgaged his own house) when he first built Disneyland. He was called a madman for doing it. And when he began planning Disneyworld they were also called crazy.
And maybe he was crazy, but today’s CEOs have to play it safe. KInd of like how Steve Jobs was crazy for coming out with a pricey mobile phone that is basically a toy.
I was wondering what people holding HPQ specifically think of the company’s idea of selling off its personal computing division.
“At least until QE3 shows up.”
Lots of pundits are expecting this. Watch out below if inflationary pressures plus dissenting FOMC members keep the Fed on the sidelines. The Fed has already taken a great deal of political flack for assuming duties which the Fed leadership has openly acknowledged are supposed to be Congress’s responsibility. Notice that a commitment to hold rates at ultra-low levels has already drawn criticism. Two presidential candidates have claim that invoking QE3 would be tantamount to a “treasonous act.” Dallas’s Fisher has come out in the press against Fed intervention which could be construed as a “Bernanke put.” Checkmate.
So good luck to the bovines who are holding out hope for some version of the “Bernanke put” (e.g. QE3) to make them whole on their stock market investment losses.
Inflation May Embolden Foes of Fed Stimulus
By Shobhana Chandra, Alex Kowalski and David J. Lynch - Aug 18, 2011 9:00 PM PT
Ben Bernanke on July 13 told Congress the Fed is prepared to take additional action, including buying more government bonds, if the economy appeared in danger of stalling or if deflation pressures emerged. Photographer: Brendan Smialowski/Getty Imagesmialowski/Bloomberg
Signs that consumer prices are rising even as the U.S. economy slows may delay additional moves by Federal Reserve Chairman Ben S. Bernanke to spur growth.
The Fed chairman, who is scheduled to speak at a Jackson Hole, Wyoming, conference on Aug. 26, used the annual gathering of economists last year to hint at a second round of so-called quantitative easing, in which the Fed purchased $600 billion of Treasuries from November 2010 to June.
Investors, such as Barton Biggs, managing partner and co- founder of Traxis Partners LP, have called for the Fed to embark on a new round of asset purchases. Yesterday’s announcement that the consumer price index rose 0.5 percent from June, more than twice the 0.2 percent median forecast of economists surveyed by Bloomberg News, may embolden Fed policy makers who oppose further such measures.
“It’s hard to say we have stagflation, but we do have inflation too high for the Fed to do QE3,” said Marc Chandler, global head of currency strategy for Brown Brothers Harriman & Co. in New York.
…
That “toy” is a more powerful computer than you were sitting in front of 5 years ago.
During the Bill and Dave days if business got slow they would implement the “9 day fortnight”. Everyone took a temporary 10% pay cut and got every other Friday off.
That was yesterday. Today Koch would call Fox who would somehow report this as Socialism robbing from the shareholder “producers” and the Tea Party would parrot it.
Our system.
HP’s recent decisions make little sense to me. Take the whole palm/touchpad fiasco going on right now for example.
Leo decides to kill all hp/palm hardware operations without informing virtually anyone involved. Then, HP discounts their remaining half million touchpad to 99$ and 149$ to liquidate.
They sold all of the touchpad in a couple days at a huge loss. The irony of all this is now touchpad is instantly one of the most used tablet computers in the world. Meanwhile HP market cap plummets 12 billion dollars.
Now a little thought experiment. How about instead of this announced failure, HP took the money and simply discounted the touchpad to these crazy prices (actually, considering the ebay market, it appears 200$ - 250$ is the sweet spot). “We’re going after Apple in a big way!.”
They could have generated the same market craze WITHOUT announcing the market pullout. Instantly they take a bite out of apples market share, crowd out the uncompetitive priced android tablets. They would have lost LESS money and I’d argue that this action would have resulted in a far different stock market reaction.
One of these directions puts HP out there as a colossal failure. The other puts them out there as a determined company ready to make sacrifices to meet apple on the battlefield and maybe even win…
Painted as a hero and with webOS suddenly the second most used tablet os, HP could have started shopping the palm division out to google/samsung/htc as a SUCCESS. The palm patents alone would make this a huge buy. Economies of scale could easily kick in to make the touchpad and its successors relevant and profit making even at the 200$ mark. If this whole debacle has shown us anything, its shown us that there is a HUGE market for a quality tablet computer in the sub 200$ range.
slickdeals thread on the touchpad had over 10 million views and 15,000 comments when I last looked at it last night. The market is ready for a game changer. A billion or two invested in a loss leader could easily unseat apple as the dominant dog and give a company a commanding position in this market.
Btw, I’m writing this on my new 32 gig touchpad. A few tweaks and I’m operating at 1.5ghz (dual core) with all logging turned off (stock the touchpad logs all sorts of data and sends it to HP every day, significantly slowing the device down). I also turned off the touch ripple effects and had my touchscreen sensitivity improved. Night and day difference, I’m loving it. There is the rub though… Out of the box with no tweaking the touchpad feels a little sluggish and unresponsive. Its easy to fix, but I doubt many people will tackle this.
This device should run like mine right out of the box and its a shame it doesn’t. There’s no excuse for this, but its a classic example of HP and palms poor handling of these devices. The homebrew community have made these touchpad and palm phones awesome, all HP had to do was tap that resource…
ncincerate, this is what happens when the inbred aristocracy starts running things.
Dell made the sames mistakes and went from number one to number 3.
When HP reached the point of deriving most of their profits from printer cartridges It became my opinion they were a fragile company. It’s a shame because as scdave said they were THE crown jewel in the valley for many, many years.
The suckers are selling low again and will wait to buy high as usual. If you have a 401k with limited investment options, you should just diversify the best you can and let it ride. As you get within 5 years of retirement, park those funds in the safest option. I keep seeing stories of retirees running for this exits in this downturn…WTF are they doing in stock funds in the first place?
I keep seeing stories of retirees running for this exits in this downturn…WTF are they doing in stock funds in the first place?
With the ultra-low interest rates that was the plan of the powers that be.
It worked until it didn’t.
Fear seems to have gotten the better of greed on Wall Street for the time being, not to mention in the housing market. Any thoughts on how long this shift in sentiment will last?
Stock market begins to feed economic fear
By BERNARD CONDON, AP Business Writers – 39 minutes ago
NEW YORK (AP) — The stock market is starting to feed economic fear, not just reflect it.
Stocks have fallen four weeks in a row. Some on Wall Street worry that the resulting blow to confidence, not to mention 401(k) statements, has set off a spiral of fear that could push prices even lower, cause people and businesses to pull back and tip the economy into a new recession.
“I’m nervous that fear will lead companies to stop hiring and people to stop spending,” says Jim Paulsen, chief investment strategist of Wells Capital Management, famous for his usually bullish take on the markets.
A home sales report this past week showed that more sales than usual fell apart at the last minute, which suggests plunging stocks and dismal economic news gave buyers cold feet. At least 16 percent of deals were canceled ahead of closings last month, four times the rate in May.
Beth Ann Bovino, senior economist at Standard & Poor’s, says that another big plunge in stocks could “push us closer to the brink.”
The Standard & Poor’s 500 stock index ended Friday at 1,123.53, down 5 percent for the week. The average is down 16 percent during the four-week losing streak. One reason for the drop is fear that another recession, if not certain, is more likely now.
The run of bad economic news started last month when the government said the economy grew much more weakly in the first half of this year than thought. Growth, at an annual rate of 0.8 percent, was the slowest since the Great Recession ended in June 2009.
The economic weakness has made investors more likely to sell stocks at the first hint that things are getting worse. And last week, they got signs aplenty.
A regional survey by the Federal Reserve said manufacturing had slowed in the mid-Atlantic states by the most in more than two years. Existing home sales fell in July for third time in four months. Another report showed that exports from Japan, the world’s third-biggest economy, had slumped for the fifth straight month. Japan is still reeling from the effects of an earthquake and tsunami in March.
The housing market, which usually helps lead an economic recovery, keeps getting worse. The plunging stock market and scary economic news won’t make it any better.
“What you’re seeing with the economy, on the job front — it’s scaring a lot of people,” says Brian Fine, a loan manager at Mortgage Master in Rockville, Md. He says the housing market will languish until buyers and sellers feel more secure about the economy.
“People are really motivated by larger economic trends. It’s all about if you feel confident enough to buy a home right now,” he says.
…
“Any thoughts on how long this shift in sentiment will last?”
Nope, but on Friday I took my cash reserves and divided it by 24 and will invest that much on each 25 point drop on the S&P. Should be some easy money regardless of when we get the bounce. I dont expect more than a 10% drop from here, but if we do, just makes me more money.
I took my cash reserves and divided it by 24 and will invest that much on each 25 point drop on the S&P.
If 50% of Americans were to divide their cash reserves by 24 they’d have enough to make a really good sandwich.
That’s half our country people but it would make a really good sandwich.
I think there is some truth to what you say Rio…I was speaking with a bank teller the other day…She’s been there 20 years or longer..We were discussing the economy and she blurted out that people just do not have any money…I did not give it much thought at the time but later realized how many accounts she must see on a daily basis…She has the “inside” info and I think she just inadvertently was telling me what she knows…People don’t have much cash…
She does and thanks for the news.
30 years of offshoring jobs, relentless attacks on unions at ALL cost and dismantling of economic safety and consumer regulations will do that.
Marie Antoinette didn’t get it either.
Always love your insightful posts, eco.
Funny, and true.
OMG, Natalie, great minds think alike! I just did something very similar just yesterday — in my case, divided by 12; perhaps my denominator is not low enough? — with plans to gradually get back into the market over the next year.
I suppose if the market has another lost decade ahead of it, I may eventually be sorry I did this, but I am scared of the risk that ongoing dollar devaluation coupled with near-0% returns could make the next few years a poor time to be overweighted in cash.
If you have a secure job I think you are doing the right thing. I intentionally picked a higher number because I am factoring in a 20% chance I lose my job at the end of the year, and a 50% chance my salary will be reduced. Revenues are about 50% of what we did last year. If I wasnt scared of job loss or salary reduction I would have used 16 which would mean we would have to hit around the 2008 low to become fully invested. I dont expect to hit or blow past the 2008 low, but I am risk adverse compared to my peers despite the comments my posts get.
“If you have a secure job I think you are doing the right thing.”
The only job I would consider secure in the current climate is a one held by someone with a great deal of accumulated or inherited wealth, or by someone (e.g. a medical doctor) whose credentials are so much in demand that they are assured to be able to quickly find another job if their current one goes away.
Wall Street is suppose to be a reflection of the greater
economy ,not a entity unto itself decouple from main Street .
“Stock market begins to feed economic fear.”
http://news.yahoo.com/stock-market-begins-feed-economic-fear-120437734.html
Maybe this fear will inspire us Americans to do what it takes to finally get our financial house in order.
Common sense doesn’t seem to work, maybe it was fear that was what was needed all along.
“Common sense doesn’t seem to work, maybe it was fear that was what was needed all along.”
I’ve long held that fear is a very effective emotion for instilling common sense. By contrast, markets that always go up and that are protected from downside risk tend to foster foolish risk taking behavior which ends in tears.
Five years ago there was a total absence of fear in the RE market and markets associated with the RE markets.
Need money? Cash out all the equity in your house. Want money? Cash out all the equity in your house?
(What if the value of my house goes down? What then?)
Don’t be ridiculous. Real estate NEVER goes down.
This was the thinking five years ago. Fear? There was no fear.
Is “buy today or be priced out forever” not fear?
No, buy now or be priced out forever was greed.
I think it was fear for those who just wanted to own a home and watched in disbelief as home prices soared into the stratosphere.
For flippers ever rising prices were a wet dream, a guarantee of future profits,
Very much so. As the impossible continued for years, it was hard to cling to sanity.
“As the impossible continued for years, it was hard to cling to sanity.”
I note “the impossible” continues to play out in gold prices as I type.
A big bounce, ounce by ounce, as gold takes off
By SARAH DiLORENZO, AP Business Writer
Wednesday, August 17, 2011 at 12:40 p.m.
FILE - In this undated handout file photo from Newmont Mining Corporation, gold nuggets and bars are shown. In December 2007, gold for about $840 an ounce. A little over a year later, it rose above $1,000 for the first time. It climbed gradually for the next two years. Then in March 2011, it began rocketing up. On Tuesday, Aug. 16, 2011, it traded at $1,788 an ounce, up 26 percent this year. (AP Photo/Newmont Mining, File )
In this July 27, 2011 photo, Davis Hardgrove performs a “scratch test” on a piece of gold jewelry that a customer brought in to sell at a coin shop, in Seattle. In December 2007, gold sold for about $840 an ounce. A little over a year later, it rose above $1,000 for the first time. It climbed gradually for the next two years. Then in March 2011, it began rocketing up. On Tuesday, Aug. 16, 2011, it traded at $1,788 an ounce, up 26 percent this year. (AP Photo/Elaine Thompson) — AP
NEW YORK — For what is normally a sleepy month, there are so many customers at the Gold Standard, a New York company that buys jewelry, that it feels like Christmas in August. Uncle Ben’s Pawn Shop in Cleveland has never seen a rush like this.
Welcome to the new American gold rush. The price of gold is on a remarkable run, setting a record seemingly every other day. Stomach-churning volatility in the stock market this month has only made investors covet gold more.
Some want it as a safe investment for turbulent times. What worries some investors is that many others are buying simply because the price is rising and they want to make money fast.
“Is gold the next bubble?” asks Bill DiRocco, a golf company manager in Overland Park, Kan., who shifted 10 percent of his portfolio earlier this year into an investment fund that tracks the price of gold. He stopped buying because the price kept rising.
In October 2007, it sold for about $740 an ounce. A little over a year later, it rose above $1,000 for the first time. This past March, it began rocketing up. On Wednesday, it traded above $1,793 an ounce, just shy of last week’s record of $1,801.
Meanwhile, stocks, despite rising sharply in the last two and a half years, are only slightly higher in price than they were a decade ago. Since hitting a record high in October 2007, the Standard & Poor’s 500 index is down 23 percent.
Gold hits a sweet spot among the elements: It’s rare, but not too rare. It’s chemically stable; all the gold ever mined is still around. And it can be divided into small amounts without losing its properties.
Ultimately, though, gold is valuable because we all agree it is. It was used around the world as a currency for thousands of years, and then it gave value to paper currencies for a couple of hundred more.
Now, in a time of turmoil, from the credit downgrade and debate over raising the debt limit in the U.S. to the growing financial crisis in Europe to worries of slow growth across the globe, gold is dazzling investors.
Since the financial crisis in 2008, central banks around the world have bought gold as a hedge against their foreign currency holdings. Earlier this month, South Korea announced it had bought gold for the first time in more than 10 years.
Gold is “an effective hedge in a world where there is too much debt and uncertainty,” says Jim McDonald, chief investment strategist at Northern Trust, which owns $2.8 billion of gold in a gold fund.
…
Yesterday I mentioned “beggar thy neighbor” currency policy in response to one of Polly’s posts. A rising price of gold against all the major fiat currencies is prima facie evidence.
It’s also worth noting that the anecdotal tales of people selling their heirloom gold jewelry for the melted value of the gold are not new; the same thing was happening in the late 1970s, the last time gold prices went parabolic. This is amply documented in William Greider’s book about the Fed, Secrets of the Temple: How the Federal Reserve Runs the Country.
And don’t miss the “shoeshine boy moment” of barber shops speculatively buying gold.
From the AP article posted above:
…
This time is different because gold is rallying against all currencies, not just the dollar, says Jim Grant, editor of Grant’s Interest Rate Observer.
“Gold is the reciprocal of the world’s faith in the world’s central banks,” Grant says, and right now, “the world is in a pickle.”
Gold prices will probably keep rising until the U.S. and Europe get their finances in order, he says - and Grant doesn’t expect that to happen soon. He predicts inflation, low for the moment, will soar, further eroding the value of the dollar and leaving only gold as a good investment.
Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington, disagrees. He thinks gold is near a peak and people who buy now are blindly chasing the rising price.
“I’m thinking of it as like the dot-com stocks,” Ciner says.
Both Ciner and Grant caution, however, that when it comes to gold prices, no one really knows. That’s because gold doesn’t have intrinsic value. It doesn’t offer an interest rate, like a bond, or represent a share of a company, like a stock. It is inherently speculative as an investment: You only make money if the price goes up.
Amy Robinette, who owns Gold Buying Girl, a network of 70 women in six states who throw parties for people to sell their gold jewelry, says her clients “don’t realize how much their gold is worth.” She gets a cut of the sales.
“Once they sell, it kind of creates a frenzy,” says Robinette, who quit a career as a personnel recruiter to start the business two years ago. “They either want to find more or tell their friends and their friends start selling.”
Sharlett Wilkinson Buckner, of Humble, Texas, recently took an old bracelet, ring and necklace to her local jeweler and walked out with $1,070.
“I couldn’t wait for my husband to come home,” she said. “I fanned my money in front of him and said, `Look what I got for my gold.’”
The next day, he sold an old gold necklace for $650.
If Peter Hug is right, this frenzy for gold is likely to continue. The director of the precious metals division for Montreal-based Kitco, one of the largest dealers of precious metals, says gold is no longer “just for the crazy people” - Henny Pennys expecting the sky to fall.
Hug says that until the U.S. tackles its debt and deficit problems, there’s no limit for the price of gold.
“As long as people are terrified that their purchasing power is going to be eroded, gold goes to $3,000 an ounce,” Hug says.
Whether or not prices climb that high, many people are deciding it’s as good a time as any to sell Grandma’s jewelry. Pawn shops and gold brokers report a surge of people cashing in their gold.
In the past two years, Tansky, who runs Uncle Ben’s and is president of the Ohio Pawnbrokers Association, says gold sales have doubled or tripled. That figure actually masks how hot gold is right now, he says, because others who would have come to his store have gone instead to unlicensed brokers that are trying to cash in.
“I saw a barber shop that had a sign, `We buy gold,’” he says. “A barber shop! Can you imagine?“
This was the thinking five years ago. Fear? There was no fear ??
Well, I will fess up and admit that I made a decision in 2006 that I thought was prudent and would likely make me a lot of money…It contained risk, but risk that was manageable IMO…
There was no “fear” or recognition that we were on a precipice of events that were about to unfold…I got caught and trapped in a bad deal that took me 3 1/2 years to work through…I lost a lot of money, but even more so, and much more costly was I lost a lot of time managing the problem…
The good news is that, a bad deal could have been much, much, uglier so I am grateful that we got out the backside in the way we did…
All the warning signs were right there in front of my eyes but I still jumped in…
Lesson learned even at my age…
“There was no fear.”
True, but it was really much worse than that. Anybody with an ounce of financial sense, who didn’t have so much money they could easily buy a $500K home with an all-cash offer, was effectively priced out by crazy loans made to subprime borrowers who couldn’t afford the homes they were buying. I don’t know whether the subprime borrowers had the financial sense to know they should have been afraid or not of the foolish, debt-funded purchases they were making.
I don’t go by emotion on investing. Not fear, not on irrational exuberance. I go with a spreadsheet. A spreadsheet is just numbers. It tells me which of my asset classes are too high. And I wait patiently for the November / December time frame when I rebalance (If I’m too low on equities by the last week of December I will shift the money into them in increments of $1,000s per week.
Emotions in investing are for losers.
I was meaning to ask you….. what are you going to buy and when?
I sometimes like to do the research and play high beta stocks, but I would not recommend it to anyone that doesnt have a lot of cash reserves and over 2 hours a day to invest. For most ppl I would invest in ETFs that you can invest in and forget about. Get a good mix of large caps, mid caps, small caps and foreign. (e.g., VV, VO, VB and VWO). I’ll attach a link below.
Here is the link. If you open a free brokerage account with Vanguard you pay no transaction fees. Like I said before, to reasonably expect to beat the market you need to spend a lot of time researching what you buy and when to sell. Most ppl cant do it successfully and thus need to be very diversified. You can also go with mutual funds but they charge more and do not significantly beat ETFs.
https://personal.vanguard.com/us/funds/etf/all?reset=true&sort=name&sortorder=asc
“Like I said before, to reasonably expect to beat the market you need to spend a lot of time researching what you buy and when to sell.”
On what evidence do you say this? Because what I have read about beating the market suggests that dumb dollar-cost averaging asset allocation to aggregate stock market indexes generally do quite well if not better than targeted investment or market timing strategies. Of course, fee-based Wall Street investment advisers will beg to differ on this point.
I suggest anyone who is seriously interested in this question read Malkiel’s book as part of your research. The price is certainly right!
A Random Walk Down Wall Street: Including a Life-Cycle Guide to Personal Investing [Paperback]
Burton G. Malkiel (Author)
4.2 out of 5 stars
Available from these sellers.
12 new from $0.63
92 used from $0.01
Thats what I meant. Buying index ETFs at good prices is better than trying to pick individual stocks you hope will make you rich. Unless you are intimately familiar with the companies, the market knows better than you. Thus, the average investor is best to dollar cost average into a diversifed portfolio at decent prices. When I say “beat the market” I mean picking particular stocks you think will outperform the averages.
I don’t know what I will buy in the end of December. I use that time frame as perhaps I will merely buy mutual funds after their dividends are distributed. If I have too much in equities I will sell.
For now I like NYB and BBEP for individual stocks. But their valuations could change in four months and be too high for me by then.
For growth stocks, I look for debt/equity of under 0.5, insider buying, book value per share below current stock price, and I also look at 50 day moving averages and 200 day moving averages and compare them with current price.
For dividend stocks I look for price to earnings ratio, history of dividend payouts, and the current yield.
I own PNW and it was a great buy a week or two ago around $38.
Maybe this fear will inspire us Americans to do what it takes to finally get our financial house in order.
Nope.
Once burned ,twice shy ,isn’t that how the saying goes ? Anybody that doesn’t see the nature of bubbles and the risk involved at this point is blind .
Be very afraid. The blind are still the majority.
Have any of Fisher’s FOMC colleagues confirmed his belief that the Federal Reserve does not have an asymmetric policy to protect stock market traders and investors from large market declines?
More importantly to stock market investors, do Fisher’s remarks signal a policy shift at the Fed, or do they merely clarify the regime that is in place?
Fed Shouldn’t Protect Stock Traders: Fisher
By Steve Matthews - Aug 17, 2011 12:14 PM PT
Federal Reserve Bank of Dallas President Richard Fisher said the central bank shouldn’t ease monetary policy whenever there is a big drop in U.S. stock prices, an action he said some traders might view as a “Bernanke put.”
“My long-standing belief is that the Federal Reserve should never enact such asymmetric policies to protect stock market traders and investors,” Fisher said today in Midland, Texas. “I believe my FOMC colleagues share this view.”
Fisher’s comments offered his first explanation of his dissent from the Federal Open Market Committee decision last week to specify a date for their commitment to low borrowing costs. The Fed said the benchmark interest rate will stay in a range of zero to 0.25 percent at least through mid-2013. The new language replaces a prior promise to keep rates low for an “extended period.”
While seven members of the panel favored the action, Fisher, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis voted no. The last time three voters dissented was on Nov. 17, 1992, under Chairman Ben S. Bernanke’s predecessor, Alan Greenspan.
“I was also concerned that just by tweaking the language the way the committee did, our action might be interpreted as encouraging the view that there is an FOMC so-called ‘Bernanke put’ that would be too easily activated in response to a reversal in the financial markets,” Fisher told a group of area community officials and business leaders today.
…
Many of us here complain about globalism and its effects on developed nations.
Ben correctly pointed out the other day that globalism is the true remaining “third rail” that nobody is willing to address…except this guy:
http://www.buddyroemer.com/2011/07/cnbc-roemer-expanding-the-gop-field/
Needless to say, they all dismissed him when he went off-air.
I don’t know enough about the rest of his beliefs, but I really liked what he had to say about trade and taxes.
Thoughts?
The attitude in this country towards offshoring and globalization are indeed strange.
I meet plenty of people who clearly understand that the good paying jobs are being offshored. Yet these same people refuse to buy American cars, even though Consumer Reports is now giving its thumbs up to plenty of domestic models (and yanking it from some sacrosanct imports).
They also buy imported appliances, clothing, shoes, furniture, tools, etc. even when domestic products are available and price is not the issue. And even if the domestic product is a little more they refuse to put 2+2 together. It’s as if they think they can buy imports and that it won’t affect them by the weak job market it creates.
Is it just me, or did the quality of Toyotas and Hondas take a dive (relatively speaking) once more and more of them started being manufactured in the States?
They’ve been making them here for quite some time, over 20 years in some cases.
I think that the recent drop in quality has more to do with cost cutting. Consumer Reports recently panned the redesigned Honda Civic and removed their coveted “Recommended” label. Honda is fuming over this.
Both of you are correct.
When the foreign car makers set up shop here, they brought their brand of QC with. When the honeymoon with local executives was over, local management went right back to American style mis-managing, and cut costs (wages & vendors) thus affecting QC.
Saw it with my own eyes at HP. The more they cut wages, the more QC went to hell.
Same with car makers.
Now they want to build airplanes with $12hr labor.
Idiocracy, we are here.
I meet plenty of people who clearly understand that the good paying jobs are being offshored. Yet these same people refuse to buy American…
I tried to walk the walk. Before I left in 08 these last things I bought were all American.
Last 4 vehicles
Dishwasher
Washer
Dryer
Fridge
ceiling fans
couch, loveseat, tables, chairs, guitars, beef jerky, beer
whiskey etc
He needs to get a message voters can understand.
Section blah, blah of the tax code…. section blah blah.
Just say it man! TARIFFS! Tax on imported oil. Tax on imported goods. Tax on exported call centers.
TAX on dollars leaving the country!
I agree with tariffs. We need to increase them but not to the point of protectionism. Our country got by with mostly tariffs and no income tax until 1913. We need to increase tariffs, break away from NAFTA, and abolish the income tax. America first.
Our country got by with tarriffs and no income tax because there was no social safety net and no medical care for the poor or sick.
The social “safety nets” are unconstitutional. The funds have been raided by both large big parties and used for other government programs, and that was illegal of Congress to do such things. Also they allowed illegals to get benefits. You should get out only what you pay in and what your employer pays in.
Unconstitutional? Which part of “establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare,” in the PREAMBLE are you not getting?
Let’s cut all social safety nets so the undeserving poor won’t get any. And in the final analysis, all of the poor are undeserving. If they had any spunk, they wouldn’t be poor.
Do you really think you’ll be safe in those gated communities? The pizza man knows the combination. If you contribute to this blog, you are not rich enough to escape. If you are rich enough, you still may not escape. Ask Charles and Camilla if they feel safe.
The social safety nets protect me from the desperate masses even if I never collect a penny personally. And frankly, I like being able to drive cross country without worrying overmuch about being carjacked.
None. “Promote” does not mean “provide.” “Insure domestic tranquility” means to prevent conflicts.
You are the one who is not comprehending, boss.
The social “safety nets” are unconstitutional.
You’re wrong. They have been deemed constitutional many times. That’s the beauty of the constitution. It’s “living” and able to be and is constantly tested.
For example:
The constitutionality of the Social Security Act was settled in a set of Supreme Court decisions issued in May 1937. The text of those decisions, with dissents, is presented here. (We also include a brief historical essay to help general readers better understand the context of the decisions.)
http://www.ssa.gov/history/court.html
I was ruminating over this issue over the weekend while driving home from a camping trip. Let’s say that every one agreed that Social Security and Medicare was unconstitutional. The problem is that these two programs are wildly popular with the Amercian people, probably more popular than any other institution in the country. However, this problem can be solved easily. The constitution can be changed to allow these programs.
So the the lack of constitutionality is not relevant to the existence of Social Security and Medicare. People who would like to eliminate those two programs should come up with a different argument.
If that’s the case (Social security, medicare are unconstitutional - which I agree with that statement), the constitution is just a rag and no one should feel compelled to pay an income tax. If you are self-employed, just do not pay. I pay only because I’m afraid of jail and also because I get my taxes withheld.
All we need to do to see an IMMEDIATE difference is end tax breaks for sending jobs overseas.
Employment goes up. Tax revenue from more paychecks goes up. Consumer spending goes up.
Win, win, win.
Yet we elect TRAITORS every time who scream “communism” when any suggestion that helps people but does not give corporations a free hand to eff us at will, is even suggested.
The Man on the tape spoke the truth ,and I’m sure he down played what he would really do . Loved it when he talked about the Politicians being bribed
Yes, tariffs.
That, and fixing any incentives to offshore our jobs, like eco has rightly kept on us about.
Bernanke under pressure to calm markets
Federal Reserve chairman faces growing demands to take decisive action to combat global economic crisis
Heather Stewart
The Observer, Sunday 21 August 2011
Ben Bernanke, Federal Reserve chairman
Federal Reserve chairman Ben Bernanke will address central bankers at Jackson Hole, Wyoming on Friday. Photograph: Alex Wong/Getty Images
Federal Reserve chairman Ben Bernanke will face intense pressure to announce new measures to calm the world’s frenzied financial markets this week, as central bankers hold their annual summer retreat in Jackson Hole, Wyoming.
After a tumultuous week, which saw billions of dollars wiped off share prices on both sides of the Atlantic, investors will be hoping for a signal that the Fed has more policy options to tackle the crisis.
Bernanke is due to speak on Friday, on the topic of “Near- and Long-Term Prospects for the US Economy”. He used his speech at last year’s gathering to pave the way for “QEII”, the Fed’s second round of quantitative easing, the radical policy of pumping electronically created money into the economy to avoid deflation.
However, analysts warned that having already announced a two-year interest rate freeze – a move that caused markets to rise for just five days before plunging back into the red – Bernanke may have little new to say.
“We’ll probably get some nice soothing words,” said Paul Dales, US economist at consultancy Capital Economics. “He may well say they’ve still got the tools to do more, but that will be about it.”
The Fed is facing growing political disquiet among rightwingers, such as the prospective Republican presidential candidate Ron Paul, who argues that the Washington-based bank is too powerful and should be brought to heel.
China, the world’s largest holder of US Treasury bonds, has also been fiercely critical of the Fed’s policies, with Beijing warning that restarting quantitative easing will undermine the value of its dollar investments.
…
China, the world’s largest holder of US Treasury bonds, has also been fiercely critical of the Fed’s policies, with Beijing warning that restarting quantitative easing will undermine the value of its dollar investments.
Ain’t that a shame. And how exactly do they expect us to pay for all those nice exports that keep their economy humming? Or would they prefer that we return to self sufficiency and make our own stuff?
I don’t blame China for accepting the gifts of wealth in the form of money and jobs and technology the U.S. has been relentlessly sending them, I blame the U.S.
How foolish would the Chineese be if they were to say no?
I think the foolish part was where they loaned the money back to us so we cold buy more of their crap. They should have known that we would eventually turn on the QE printing presses and debase our currency n the process.
And they know they can’t demand that we pay in something other than USD. It’s like we are in a weird codependent state, where we actually hate each other but can’t get divorced.
When we sent money to China we sent to them claims on assets. That is what one of the things money is, claims on assets.
They have been exercising these claims by buying up assets all over the globe. They also have been loaning these claims back to us so we can buy more of their junk, just as you have said.
But whether the Fed turns up the QE printing press or not does not change the asset claim status of the money we sent to them. From what I see lately in various markets the value of these claims has been increasing as the price of the assets they can be exchanged for have been decreasing. It is no mean trick, for example, for the holder of dollars here or anywhere else to convert their dollar holdings to asset holdings of any of thousands of U.S. companies if they so choose to do so.
They are, which is why they hate QE, as it dillutes those claims. And if they turn those claims into dollar denominated assets, those too will be dilluted.
There are rumors running around that Disney might sell its Theme Park biz to Chinese investors. But those properties in Orlando and Anaheim could turn into a falling knife if we continue to devalue our currency. So they still lose.
But as I said before, what else were they expecting to happen?
“But whether the Fed turns up the QE printing press or not does not change the asset claim status of the money we sent to them.”
I suggest you consider what would happen to the value of Chinese claims if QE were used to print up $1,000,000 to be immediately handed over to every one of the 114,000,000 American households, in order to stimulate our way out of economic malaise.
I realize this would not be politically feasible, but it is worth considering extreme cases to consider the direction of consequences — something my all-time favorite mathematics professor taught me many years ago.
“I suggest you consider what would happen to the value of Chineese claims if QE were used to print up $1,000,000 to be immediately handed over to every one of the 114,000,000 American households.”
“I realize this would not be politically feasable …”
Good, then I won’t bother considering what would happen.
“Good, then I won’t bother considering what would happen.”
Perhaps you missed my point then about using an extreme case to clarify the direction of the impact of a less-extreme case?
I thought the American people and then Great Britain were largest holders?
Rival Republican candidates have taken note of Perry’s outlandish recent remarks. Given the intelligence of the average American voter and the mindset of the Republican base, I’m not sure this will for or against Perry’s chances.
P.S. “Perry made comments Wednesday on the campaign trail that cast doubt on climate science and evolution.”
Correction: Perry made comments which cast doubt on Perry. No scientist would change his or her views based on some maverick politician’s MSM-quoted sound bites. Make room for Jon Huntsman!
Huntsman: Perry risks being dismissed as someone not ’serious on the issues’
By Meghashyam Mali - 08/20/11 11:49 AM ET
Republican presidential candidate and former Utah Gov. Jon Huntsman took aim at Texas Gov. Rick Perry’s (R) criticisms of Federal Reserve Chairman Ben Bernanke saying that Perry risks being dismissed by voters as someone not “serious on the issues.”
“I’m not sure that the average voter out there is going to hear that treasonous remark and say that sounds like a presidential candidate, that sounds like someone who is serious on the issues,” said Huntsman in an interview with ABC News’ Jake Tapper to be aired on This Week on Sunday.
“Every time we have these sideshows take place, finger-pointing and name-calling. It takes us that much farther off the ball, which is fixing our core in this country, is getting our economy fixed and creating jobs,” added Huntsman.
On the campaign trail, Perry had said Bernanke would have been treated “pretty ugly” in Texas if the Federal Reserve chief were to print more money and suggested such an action would be “almost treacherous — or treasonous.”
“I don’t know if that’s pre-secession Texas or post-secession Texas,” added Huntsman in his interview a reference to a report that Gov. Perry had once said that Texas could leave the United States “anytime we want.”
Huntsman also took issue with Perry’s skepticism over climate science and evolution.
“I think there’s a serious problem. The minute that the Republican Party becomes the party - the anti-science party, we have a huge problem,” said Huntsman. “We lose a whole lot of people who would otherwise allow us to win the election in 2012.”
Perry made comments Wednesday on the campaign trail that cast doubt on climate science and evolution.
“You know it’s a theory that’s out there, and it’s got some gaps in it,” Perry said of evolution. On climate change he added, “I do believe that the issue of global warming has been politicized.” “I think there are a substantial number of scientists who have manipulated data so that they will have dollars rolling into their — to their projects.”
…
More news from The Hill:
♦ Perry: Scientists manipulating climate change data
♦ Perry under fire for Bernanke-treason remark
♦ Huntsman tries to carve role as centrist ‘truth-teller’
♦ Huntsman: ‘Call me crazy,’ I believe in evolution, warming
Doesn’t Huntsman also believe in globalization?
Hold on a second…Republican Huntsman, of Utah, is an evolutionist? Darwinist? Interesting!
I’m a Ron Paul devotee but I am also a Darwinist. I think Ron Paul is a closet Darwinist. He does not wear religion on his sleeve, nor does he want to. He thinks religion is a private issue and does not belong in politics. Constitutionalist that he is.
It’s very interesting, especially if you take a close look at where the Mormon church stands on evolution. I can assure you most Mormons, possibly including Huntsman, have not done so…the stand of the Church on evolution is not something they care about sufficiently to carefully research it.
Ron Paul says on his website that he has “Accepted Jesus Christ as his personal Lord and Savior”.
That’s Fundyspeak, whether he truly believes this or is simply pandering to Fundies, I don’t know.
Ron Paul is a non-interventionist for peace. If he believes in Armaggedon, he would abandon non-interventionism and want to meddle in the Middle East to bring about the second coming of Christ. I trust him because of his principled voting record. And I researched his voting record on the web. A man who stands by what he says is not a danger if he consistently promotes peace.
“I think there’s a serious problem. The minute that the Republican Party becomes the party - the anti-science party, we have a huge problem,” said Huntsman. “We lose a whole lot of people who would otherwise allow us to win the election in 2012.”
This is the big Republican party mistake of letting the radical fringe take over the Republican party. Even you Republicans have to admit that most of your current crop of presidential candidates bear a slight resemblance to a clown posse.
more than slight.
View the slide show:
http://blog.chron.com/nickanderson/#691-1
Sarah Palin takes a stand on an important campaign issue…
Got popcorn?
Sarah Palin Seconds Rick Perry’s ‘Treasonous’ Bernanke Remarks
By Robert Schlesinger
Posted: August 19, 2011
I suppose it’s no surprise that like a moth to flame, Sarah Palin would turn up in the media glare surrounding Texas Gov. Rick Perry’s lunatic comments about Federal Reserve Chairman Ben Bernanke.
Perry, you will recall, said that if the Federal Reserve embarked on another round of quantitative easing, it would be the sort of thing which would cause Texans to “treat him pretty ugly.” He added that, “Printing money to play politics at this particular time in American history is almost treacherous—or treasonous.” (And if you watch the video it’s clear that he says “treasonous” as a correction for “treacherous,” not as an addition or alternative.) [See a collection of political cartoons on the 2012 GOP hopefuls.]
Treason, of course, is a capital crime. It is, according to the dictionary, “the offense of acting to overthrow one’s government.” So to be clear, Governor Perry doesn’t simply disagree with the economic policy of Bernanke. Rather he posits that this Republican former aide to President George W. Bush (chairman of Bush’s Council of Economic Advisers) is not trying to save the economy, but rather is playing politics—presumably trying to stimulate the economy on Barack Obama’s behalf … which would be bad because heaven knows we don’t want the economy to get moving again—and in doing so is trying to bring down the government.
…
The tea party wing of the GOP reminds me of the confederates; southern in origin, financially selfish and racially biased.
+1
Also predestined to lose…
I absolutely agree with the intensity of sentiment from Palin and Perry. However, the incitements to violence are extremely troubling. I could not oppose more strongly continued money printing by The Bernank.
I ascribe to Bernanke, what I ascribe to most politicians - venality and fecklessness.
I don’t ascribe treason. If they were treasonous, they should be dealt with like any other traitor in a time of war.
This kind of speech - accusing public officials of treason and promising ugly treatment - is reckless. If Palin and Perry don’t understand why, it does not speak well of their judgement. If they do understand why, and they continue to do it, then… well, that would be very unfortunate.
“However, the incitements to violence are extremely troubling.”
I guess the memory of what happened to that Arizona Congressional rep in a district which Sarah Palin’s supporters showed on a web site as targeted in their crosshairs faded rather quickly?
Agreed, Neuromance.
The FED needs to be abolished, plain and simple.
Realtors Are Liars®
Well duh. Is the bear Catholic?
Right wing Christian nut jobs are circling the wagons around Perry now. Watch out for them liberal nitpicking gotcha-media tricksters, Perry!
Barbour Warns Perry: A Conservative, Christian, Southern Republican Like You Will Be ‘Nitpicked’ by Liberal Media
By Geoffrey Dickens | August 19, 2011 | 14:14
When NBC’s Andrea Mitchell, on Friday, asked Haley Barbour if Rick Perry had to “clean up his language?” the former head of the RNC brushed back the host of MSNBC’s Andrea Mitchell Reports by subtly accusing her of engaging in typical liberal media tricks.
The current Mississippi governor warned his fellow Republican to be prepared to be “nitpicked by the liberal media elite” because “When you are a conservative, Christian Southerner, Republican, you have to expect that.”
…
Looks like they are afraid of Bachmann winning the nomination. She would get every evang/fundy vote on election day, but would probably scare every moderate either into Obama’s arms or they would stay home.
Perry looks more mainstream. I wouldn’t be surprised if he toned down the fundy language. I’m not sure though how talk of cutting back on UE and Welfare during what is certain to be a period of high joblessness will play in Peoria.
I’m pretty much as fiscally conservative as they come, and if Bachmann is the candidate, I’m voting for Obama. Religious nuts are not cut out to run the country; Obama might damage our standing in the world through runaway spending, and may tax me more because of my income. However, I’m afraid that Bachmann (and the other crazies like her) would start a dam* holy war with the Islamic nations. Not the kind we have now, but an all out holy war. And, as much as we all complain about O’s policies, it’s a heck of a lot better than another “Crusade” from the religious zealots.
Ahh heck, who am I kidding. I’m voting for Paul anyway.
I’m with you Overtaxed. I read the last line there. Thanks. Evolutionist Huntsman (if it’s true he’s an evolutionist) is my second choice. Obama is my third choice, since I’m a flaming social lib.
Yup, as am I. Fiscally conservative, socially liberal (really liberal). RP echo’s my views well. I want to abolish the police state, and stop with the runaway spending. I’m a bit afraid of someone like RP winning the election though, he would bring about so much (and so rapid) change that I’m concerned he’d be assassinated in office.
I can’t stand conservative social views. But, at the same time, I can ignore that more easily than I can ignore 50% of my income being paid in taxes. So I usually vote Republican. But this current crop of candidates just has me totally cold. Haven’t heard much from Huntsman; if he continues to do well, I’ll certainly learn more about him. If he believes in evolution, that’s certainly a good sign!
I’m a bit afraid of someone like RP winning the election though, he would bring about so much (and so rapid) change that I’m concerned he’d be assassinated in office.
Our political system doesn’t really allow for so much (and so rapid) change.
“I wouldn’t be surprised if he toned down the fundy language.”
I thank him for revealing his extremist stripes before his handlers could advise him not to do so. America, consider yourself warned.
toned down the fundy language ??
For how long…A few hours, days ??
He is a white male, evangelical, Governor from Texas…All it will take is a little prodding from some left winger and he will go off like a bottle rocket…
“For how long…A few hours, days ??”
If his handlers are smart, they will muzzle him from now until November 2012 Election Day.
When you are an ignorant, lie spewing, self-serving deusch bag, you have to be ready for the media to point that out.
Take a trip through the churches of Italy, and you quickly learn that “Christian Tradition” translates to “total cow dung”.
“Christian Tradition says these holy steps are the steps that Jesus had to climb to receive judgement from Pontius Pilot, however, they are made of Italiam marble and there are historical documents that indicate the marble was actually stripped from the temple of Saturn in the forum.”
“Christian Tradition says that those are pure gold busts that contain the incorrupt heads of Saint Peter and Saint Paul. However, those are actually bronze and aren’t even the origials since the originals were stolen in the 1800s.”
“Christian Tradition says the 7 springs on this hillside are from where Aint Peter’s head bounced after he was decapitated… holy water sprang from the ground at each place his head bounced. However, there was a pegan church on this site dating back to atleast 500BC and they attributed the springs to Venus. Geologist say that it is due to several lava tubs in the an ancient non-porus lava flow on the side of the extint volcano.”
Those butt-heads and their darn reality getting in the way of a really good story.
“When you are an ignorant, lie spewing, self-serving deusch bag, you have to be ready for the media to point that out.”
Praise the Lawd for America’s free press!
Media drops the ball again. Perry and his pretenders aren’t Christian. They are Evangelical Reconstructionists. There is nothing Christian about these people.
And don’t mention Jesus’ final judgement day to them. They claim it doesn’t apply to them and that they won’t be held accountable for not helping others.
Yes I know. They’re in for an eternal surprise.
The atomic bomb has nothing on religion as a comparison to the amount of deaths/suffering imposed on humankind. Shoot, even just a small portion of history (the Crusades) has it beat. It’s the most destructive force ever released upon man, especially radicalized religions (which we seem to get more of every day). I know Atheism has it’s share of blood on the hands (Soviet Union); but still, not in the same league.
“I know Atheism has it’s share of blood on the hands (Soviet Union); but still, not in the same league.”
In all fairness, atheistic totalitarian systems (Soviet Union, Nazi Germany, etc) are a modern creation; religion had a huge head start on these other memes which confer a license to kill on their adherents. One would have to somehow calibrate the rate at which these different mind control systems led their followers to kill others in order to have a valid comparison across 007 ideologies.
The idea that these regimes you speak of are “athiest” is absurd. They are religiosity taken to the extreme. The posters/murals/collages of Mao, Stalin, Castro and Saddam is the obvious demonstration of that religiosity.
This is exactly why why we as Americans were so gutless after 9/11 in Fighting a Religious Jihad.
We should not be killing innocent people in the streets of afghanny or Iraq, we should be aiming at their mosques at Haj when they are on their knees praying to allah..
The atomic bomb has nothing on religion as a comparison to the amount of deaths/suffering imposed on humankind.
“When you are a conservative, Christian Southerner, Republican, you have to expect that.”
Stupid is as stupid does.
All you need to know about Rick Perry. (slide show)
http://blog.chron.com/nickanderson/#691-1
My house, my hut, my home,
Just to find out it was all on loan.
My house, my hut, my home,
You don’t know what you got till it’s gone.
The door, the knob, the lock, the latch,
The bank wants all of that.
The bank.
http://www.youtube.com/watch?v=KJbKfdv0JXY
[adult language]
It still shocks me that people in positions that should understand, that are clueless.
This morning I flip on Wall Street Journal Report with Maria Fishface (not aging well).
David Stockman, former OMB director saying low interest rates are the worng thing. We have $30T in public and private debt we’re carrying around(wrong, $39T). Low interest rates are the policy of pushing more debt. We need to be pushing a policy that encourages saving, and we are punishing savers with the low interest rates.
His solution to our current problmes?
1) Increase interest rates to discourage spending and encourage savings.
2) VAT tax to discourage spending and encourage savings. We have 2 main sources of government income, income taxes generate about 1 trillion and payroll another 1 trillion and we need another source of government revenue.
MORON!!!!
How does doing EITHER of those things help people with virtually no disposable income to pay down their interest, have more money to pay back their debts?
Hey idiot. What creates debt? Right, trade imbalances.
VAT tax hits the bottom end of the pay scale much harder than the high end, and that widens not shrinks the trade imbalance.
How do we get down debt? Tighten lending and reverse the trade imbalances!
1) Drastic re-regulation of banking to block the creation of new debt.
2) Tariffs on imports and money leaving the country to reverse international trade imbalances. This also corrects domestic trade imbalances by creating more jobs and bringing up wages of workers.
3) Get rid of the regressive payroll taxes and double taxation on corporate profits and roll them into higher income taxes. Eliminate virtually all income tax dedeuctions and greatly steapen the rate curve. Top marginal tax rate to atleast 80%. Treat all income as income regardless of source, capital gains, inheritance, etc.
4) Wealth tax on cash and equivilants to get people with money to spend it.
Our 2 main sources of government revenue are not enough, so we need a 3rd source? WRONG!!! Fix the problems with our current sources!
Hey idiot. What creates debt? Right, trade imbalances.
You have to realize that for these people globalism is a matter of faith. To ask them to renounce that would be like asking a Fundy to renounce Jesus as their “personal Lord and Savior”. (I never understood the whole “personal” thing. Doesn’t the New Testament say that Jesus was sent to save the whole world?)
You have to realize that for these people globalism is a matter of faith.
I wouldn’t include David Stockman in with these people. He’s been waving his arms and saying the country’s in big trouble for years and has gone against his own party to do so.
What we’re seeing now is the “checkmate” position that Schiff identified 5 years ago. When you have more debt than wealth available to plug the hole there is no painless way out. What people are arguing now is who will be faced w/the worst of it.
What we all should be watching diligently is where is that hot potato today? (Where are they burying the debt obligations and how can I distance myself from that area?)
+ 1000 CarrieAnn
“Hey idiot. What creates debt? Right, trade imbalances.”
There it is. The real fundamental problem.
When the trade deficit goes away, all these other problems go away.
Cause and effect, but backwards. Without the willingness to go into debt, the trade imbalances could not have been enabled.
No I got it precisely right.
Perhaps you discount the “I’ll gladly pay you on Tuesday for a hamburger today” effect. Greed got us in this mess, it’s not what somebody did to us. If one is resolved to live within one’s means, and have something left over to share with a neighbor who is in need, a lot of trouble is automatically avoided.
And the fact that the lopsided balance of payments is a direct result of offshoring from 1980- current is a directly result of the drive for increasing corporate profits completely eludes you.
Precisely, exeter.
It is not just international trade imbalances. Domestic trade imbalances exist also, like billionaires making more billions by laoning their billions to more people that can’t pay it back, assuming that when it all goes to crud, government will step in and ensure they get paid back.
Your right Darrell, he is an idiot.
Victim quote of the week.
From National Lampoon’s Vacation.
Clark: So, this is the old homestead, eh?
Cousin Eddie: Yeah. I don’t know for how much longer, though. The banks been after me like flies on a rib roast.
Cousin Eddie: I got laid off when they closed that asbestos factory, and wouldn’t you know it, the army cuts my disability pension because they said that the plate in my head wasn’t big enough.
Great movie, but it’s sad how the same things that were problems then are still problems… 30 years later.
For those of you who stream Netflix, and love horror movies, have I got a movie for you. This is now available to watch instantly:
Dream Home
http://movies.netflix.com/WiMovie/Dream_Home/70119913?trkid=4213507
“Cheung (Josie Ho) will do anything to own her perfect little dream home — anything. And with a mix of cold-hearted determination and homicidal tendencies, the title and deed do become hers. But who will have to pay the price for Cheung’s outrageous methods?”
A horror movie about the Hong Kong housing bubble! If you like splatter-y horror movies, you should check it out. If you don’t, avoid it, because it is extremely violent. Extremely. But also darkly - I mean pitch black-ly - humorous. A very over-the top gorefest as well as a satire of the housing bubble. It is intelligent and well-made, with high production values, and the women are all easy on the eyes. Highly recommended, but not for the faint of heart. The Asians are gleefully sadistic in their horror movies.
Not sure how it got made, though, since it’s like a movie for people who are fans of both the Housing Bubble Blog and Fangoria. That can’t be a big market.
Hong Kong action gore horror fest?!
You can’t go wrong!
It was a pretty good flick. I loved it when the drug dealer looked down at his intestines on the floor, and decided to smoke a joint. So Lehmanesque
Realturds are truly liars, and here’s why:
March 2011 A home that we liked the frontage of comes on the market, and is sold quickly. Turns out it was a SS. (Disclosure is many times hidden upfront.)Falls out of escrow. Weak buyer.
May 2011 Comes back on the market, so we preview it. Our Buyer’s Broker tells us that they have 5 OFFERS in 3 DAYS, since the listing priced dropped. 1 cash, 2 -20% down, and 1 other. Hurry up, if you like what you’re about to see…opens door to listing.
Fwy noise, major fixer, bad remodel in master. We pass. It shows pending for months as “Under Contract” with the second buyer.
Aug 2011 Get a call from our Buyer’s Broker Assistant. Our Buyer’s Broker is the Listing Agent on the SS. Current buyer walked. It’s an opportunity says his assistant, no communication with her boss that we didn’t want it. They have 14 days to find a buyer she says. I say “Don’t even try to make your problem ours, kabish!” I repeated how we work. We find the house, she’s the door opener, that’s all. Deal is handled through the Broker we cut a deal with, period. She got snotty with me, and I hung up. What happen to the 4 other buyers lined up and salivating?
You would think a cash buyer would be someone not to tick off. Lies and attitudes. Oh I forgot, they are realturds.
(Cronisym got this young twit this job, she inherited her home, and she has an attitude? )
This speaks to the corrupt nature of reaItors.
India starting a grassroots anti-corruption campaign. I’d like to see one here.
http://www.telegraph.co.uk/news/worldnews/asia/india/8714098/Anna-Hazares-anti-corruption-campaign-sparks-Gandhi-cap-revival.html
Don’t expect any results there for at least a generation.
I saw Harold Ford Jr. (D - former congressman, DLC member) on Meet The Press this morning. He made a surprising comment: “Wall Street and Main Street are the same.”
I guffawed. I thought, they’re the same like a dog, and a tick sucking on that dog are the same.
It just reinforced the stranglehold that Wall Street and Big Business have on both parties.
Wow! He has no clue, does he?
Looks like the banks been after Burt like flies on a rib roast.
Friends, fans speak out in support of Burt Reynolds, whose Martin County waterfront home faces foreclosure
By Bill DiPaolo Palm Beach Post Staff Writer
Posted: 11:37 p.m. Saturday, Aug. 20, 2011
HOBE SOUND — Friends and fans of Burt Reynolds are rallying around the north county icon after hearing his home is under foreclosure proceedings.
BankAtlantic and Great Eastern Mortgage say the Emmy Award-winning actor has not made a mortgage payment since Sept. 1, 2010, on the home assessed by Martin County officials at about $2.4 million. BankAtlantic, according to the complaint, holds a second $750,000 mortgage on the 13,000-square-foot home.
“I am as surprised as everyone,” Reynolds, 75, said through a representative since he is filming a movie in Toronto with country music star LeAnn Rimes. “I thought my career and my life could not be going better. To all of the people who have had such faith in me and stuck by me through thick and thin, thank you. I know it is not the end of the world. There are a lot of people worse off than I am, and my heart goes out to them. I’ll do like I’ve always done, and try to hold my head up high.”
Outside the locked black wrought-iron gates at the home is a sign reading Valhalla, the mythical place where Nordic god of war Odin greets slain warriors. The five-bedroom, seven-bathroom home is listed for sale for $9 million.
The highest price a waterfront home in the area has sold for recently is $6.5 million, said Jupiter Realtor Robert Thomson, owner of Waterfront Properties. Reynolds’ 3.4-acre waterfront property has a 2,000-square-foot guesthouse, cinema, swimming pool, wine room, indoor waterfall, billiard room and boat dock, according to Martin County records. There’s a pad for a helicopter, Thomson said.
“It’s cozy. Not ostentatious. It’s what you’d expect of Burt,” he said.
Tough financial times are nothing new for Reynolds, a 1954 graduate of Palm Beach High.
He declared bankruptcy in 1996. The next year he closed the Burt Reynolds Dinner Theatre on the northwest corner of Indiantown Road and A1A. The theater reopened in 2002 as the Palm Beach Playhouse at Jupiter Theatre. In 2004, it became the Maltz Theatre
http://www.palmbeachpost.com/news/friends-fans-speak-out-in-support-of-burt-1768757.html -
Burt was once on top of his game, and made lots of $. Typical narcissist, didn’t think beyond his once good looks and fame, to buy and pay off a home, and live semi modestly. Screw him.
Reminds me of Ed McMahon crybaby fiasco.
Yep. But it’s the same with most celebrities. That kind of ego will not tolerate any speculation of no longer being “vital.”
13,000 sqft is not “cozy.” It’s an effing mansion, you idiot!
Way OT…A young lady who works with my wife had a child 2weeks ago. She was in the hospital for two days. Nothing abnormal, regular delivery, healthy child. Her bill was right at $10,000.00.
I have the bill for my birth in 1956, it is about the size of a 3×5 card.
“Professional services”
Delivery fee. - Dr. Geibel - $75.00
Circumcision - $15.00
* $5.00 charge for a fan that my mother requested in her room for her two day stay.
Grand total $95.00
*Ins. covered $50.00
So what happen to the dollar between then and now?
My baby experience came a little over 2 years ago. Want to know the biggest source of frustration I encountered?
NOBODY COULD TELL ME WHAT IT WOULD COST!!!
I can’t even begin to tell you how many hours I wasted trying to get an answer. My wife had good insurance but all blue cross would tell me is that I needed to ask the hospital. All the hospitals would tell me is that I need to ask blue cross. Every time I’d try to get numbers it was consistently ambiguous. Nobody would quote me any hard numbers. I was run around in circles. No single explanation matched the others, it was total voodoo.
As the day drew close I stopped even trying.
Finally we had the baby, so on my way out I ask for the bill. My wife had to have an emergency c-section unexpectedly, so I was expecting a reasonably larger bill. The lady hands me a bill for 1400$ that I pay on the spot. I say “is that it?” to which she explains there may be an additional bill once my insurance co is done looking at everything.
The additional bill came by mail. Over 3000$. Among many fun charges were the double deductible (because the baby gets his very own deductible), and charges for the recovery room paid twice because both my wife and my baby needed to pay to sleep in the same room.
Even funnier, the hospital had immediately sold this debt to a servicer collection agency (presumably at a significant discount), demonstrating that they could have easily charged a more reasonable amount. Nice.
The system is very, very broken.
Economically, we have the worst medical system in the world.
To answer your question wmbz, the answer is “insurance companies” or in this particular industry, HMOs.
That may be what the doc charged, but that does not include the hospital charges.
“We’re coming through a terrible recession; a lot of folks are still looking for work,” said President Obama Saturday in his weekly radio talk. “A lot of people are getting by with smaller paychecks or less money in the cash register, so we need folks in Washington — the people whose job it is to deal with the country’s problems, the people who you elected to serve — we need them to put aside their differences to get things done.”
~ A comment from a clueless rich person!
” so we need folks in Washington — the people whose job it is to deal with the country’s problems, the people who you elected to serve — we need them to put aside their differences to get things done.”
I guess he`s off the hook because he said nothing about, we need folks in Martha’s Vineyard — the people whose job it is to deal with the country’s problems, the people who you elected to serve — we need them to put aside their differences to get things done.
The president is vacationing on Martha’s Vineyard in Massachusetts.
peaceful coexistence.
You’re really reaching here wmbz. There is nothing in that statement that is false or out of line.
No clueless rich person would have been sufficiently self-aware or candid to make that remark.
The poor clueless gubmint worshipers can never grasp simple facts and their masters love it!
~ Modern politics. “Congress must deal with the country’s problems” would have had Jefferson, Adams, Madison, and their cronies doing classic double-takes. When they laid out the new Constitution in 1787 the idea of requiring Congress to micro-manage the job market would have brought gales of laughter from the committee of founders.
The game changed with the Employment Act of 1946 when the federal government assumed the job of keeping unemployment at a very low level.
This is one of the main reasons children who became teenagers in the 1950s and 1960s picked up the idea the government owed them a living. Not only a living, but an education beyond high school as well.
Worse, these young Baby Boomers were also taught that the good life was to be purchased in installments.
A few years ago a neighbor (a banker) called the trend to permanent indebtedness “Perma-Hock.” Even people who were within sight of finally clearing their mortgage were encouraged to borrow against the equity they had built up. A great many people lived to rue the day they fell for the scheme.
I mention all this because 65 years have passed since the national government assumed direct responsibility for managing the jobs market. It has run itself into an un-payable level of debt. President Obama should be taking his cues from President Coolidge not Franklin Roosevelt. Roosevelt tinkered boldly with the 1930s economy and could never get it booming…until WW2. Coolidge stood aside and let the economy do its thing in the 1920s. (The ’20s Roared!)
I do not recall being encouraged to live in debt in the 60s’. Credit cards were Sunoco and were just for gas. My first car loan was a big deal, and at 24% interest (just below the legal usury limit).
I can’t even begin to point out everything that is wrong with your post, wmbz. Not enough hours left in the day.
Happy Birthday, Ron Paul!
Dr. Ron Paul was born 76 years ago yesterday. During his “working days” as an obstetrician he delivered some 4,000 babies. . .and his supporters believe he can still deliver the goods in his bid for the GOP nomination for the presidency.
Media elite do not support him. How could they? He ardently promotes the idea of re-establishing a sound money system in the U.S. Leading commentators cannot bring themselves to believe that honest currency can possibly work. They haven’t experienced an honest money system their entire lives. The idea is alien!
Paul is all for calling home American troops from stations all over the world. He thinks the military is for protecting the U.S. and not regimes elsewhere. Do we really need to spend all that money maintain armed forces in GERMANY? Conservatives are very big for huge Pentagon budgets, so Paul strikes out on that score, too.
And the poor fellow has been pushing for years the idea of forcing the federal government to live within its revenues. Well, political experts everywhere will tell you in no uncertain terms that the idea of living within one’s means is a lovely old-fashioned idea, but can’t possibly apply to the federal government of the United States of America. It is, after all, the mightiest nation on the face of the earth! It is also the biggest debtor nation on the globe, but almost everybody but Representative Paul thinks that is not a handicap.
HB, RP!
Dr. Paul wants to repeal the Patriot Act too.
Happy Birthday Dr. Paul! Go get ‘em!
I love anti-abortion candidates.
Wmbz:
If those regimes pay for all our expenses to protect them..then its no sweat off our backs. Otherwise we need those troops here to protect our borders and very very soon our feral kids and flash mobs.
Paul is all for calling home American troops from stations all over the world. He thinks the military is for protecting the U.S. and not regimes elsewhere
I’m kind of missing the main point of this story. Is the writer suggesting that Mr. Champion deserves special treatment, in the form of exclusion from contractual terms to which he agreed, just because he is “no slouch when it comes to finance” and his grandfather was chairman of Chase Manhattan Bank in the 1960s?
If that’s not the point, then what is?
‘Forced’ insurance adds to home woes
Hidden practice of imposing coverage adds burden to those at risk of foreclosure
Written by Dean Calbreath
9:34 p.m., Aug. 20, 2011
George Champion III is no slouch when it comes to finance.
His grandfather, George Sr., was the chairman of Chase Manhattan Bank during the 1960s, and he has spent his own career heading real estate and investment businesses in La Jolla.
Nevertheless, he recently fell into a trap that has led to default and foreclosure for the less fortunate. Even though he survived largely unscathed, it was enough to make him launch a lawsuit against J.P. Morgan Chase, the successor to his grandfather’s bank.
The issue is “force-placed insurance,” one of the many hidden practices that produce profits for mortgage-servicers and disaster for homeowners.
Unbeknown to most homeowners, if a home insurance policy lapses, the lender can impose its own that is typically priced far above the market price — sometimes so high that it can force homeowners into default or foreclosure.
It is a widespread practice. In 2010, lenders imposed $5.5 billion worth of such insurance on borrowers nationwide, up from $1.5 billion five years ago. Chase alone imposed 163,564 policies nationwide, including 20,650 in California.
The business can be profitable for the lenders, who often get fees or commissions from the insurers. It also protects them from loss.
Balboa Insurance, a specialist in forced-place insurance, says it provides “valuable protection and peace of mind to financial institutions large and small.”
Ron Wiser, a managing partner of Ohio’s Loan Protector Insurance Services, has written that “when used correctly, a lender-placed insurance program is a powerful and necessary tool to achieve borrower compliance with insurance requirements.”
In a congressional probe of banking practices this month, financial industry lobbyist Robert Couch said force-placed insurance “is not necessarily a conflict of interest. In fact, it may make it easier for the consumer to have services that are provided in-house versus going outside.”
Last year, the Dodd-Frank financial reform act contained a requirement that force-placed insurance should be “reasonably priced.” The Mortgage Bankers Association — which has long defended the insurers — successful lobbied to have that portion of the law removed.
“The consumer agreed to lender placement when he or she signed the mortgage,” John Courson, who heads the association, wrote at the time.
Champion’s lawyer, John Donboli of the Del Mar Law Group, countered, “It’s just one more mechanism to transfer money from the borrower to the lender.”
…
“I’m kind of missing the main point of the story.”
The main point is at the story’s end:
“It’s just one more mechanism to transfer money from the borrower to the lender.”
The main point of this story is the main point of many stories found here at the HBB: It’s all about saving the banks.
IMO the financial sector is contracting faster that the general economy and the members of the financial community are doing everything possible to extract revenue in order to survive. Hence we see ATM withdawl fees and forced insurance and such.
Look for more to come.
I understood that part. What I didn’t get is the writer’s hint that the home owner was somehow wronged by the lender’s decision to follow through on the contractual provision that authorized the forced purchase of homeowner’s insurance in case the owner abrogated his obligation to buy his own insurance.
If this financially savvy buyer agreed to these terms, I don’t see the problem.
Romney to quadruple La Jolla home size
The GOP contender plans local fundraisers for president this weekend
View from the beach of the 3,009-square-foot Romney home in La Jolla, which the GOP contender plans to demolish and replace with an 11,062-square-foot home.
Gallery: Mitt Romney’s La Jolla tear-down
LA JOLLA — GOP presidential contender Mitt Romney, scheduled to attend a series of fundraisers this weekend in San Diego, is also working on plans to nearly quadruple the size of his $12 million oceanfront manse in La Jolla.
Romney has filed an application with the city to bulldoze his 3,009-square-foot, single-story home at 311 Dunemere Dr. and replace it with a two-story, 11,062-square-foot structure. No date has been set to consider the proposed coastal development and site development permits, which must be approved by the city.
The former governor of Massachusetts purchased the home three years ago. According to a description from the listing agent, the Spanish-style residence at the end of a quiet cul-de-sac is sophisticated and understated in its décor, “offering complete privacy and unsurpassed elegance.”
…
Read: “The lynch mob will never be able reach me.”
Go for it, Mitt!! Show the entire process on TV. Show how much everything costs too.
Looking on the positive side, I am pretty sure whoever does the work will be grateful for the opportunity, as the residential construction industry in San Diego remains in a depression.
“The GOP contender plans local fundraisers for president this weekend”
First read through had me wondering why Romney is raising funds for Obama.
Rampant Fed-fueled consumer price inflation is rearing its ugly head.
Do the QE3 cargo cultists really believe the Fed will reward Wall Street yet again when Main Street America is grappling with inflation layered on top of double-digit unemployment rates in many places Main Street Americans call home?
Consumer Price Index jumps 3.4 percent here
Written by Elizabeth Aguilera
12:30 p.m., Aug. 18, 2011
In this photo taken July 22, 2011, Dennis Glaser, 64, of Tangent, Ore., looks over his field of premium rye grass in Tangent, Ore. Across the Northwest, farmers like Glaser are watching their bottom lines as they cope with a year of cool, wet weather causing late cherry crops, spoiled peaches and world-class grass seed that could germinate before it ever reaches the market. (AP Photo/Rick Bowmer)
Soaring energy costs and food prices are to blame for the 3.4 percent increase in the San Diego County Consumer Price Index in the first half of 2011, compared to the first half of 2010 when it rose 1.4 percent.
“This is no surprise to anyone,” said Lynn Reaser, economist at Point Loma Nazarene University. “The push in energy prices was driven by the unrest in the Middle East and the overall boom in commodity prices has been charged by the growth and demand in emerging markets such as China and in part by the Federal Reserve’s efforts to jump start the economy with a flood of new liquidity.”
National food prices rose 0.2 percent in July over the previous month and 4.2 percent over the previous 12 months. Factors contributing to the rise include global demand for food, crop failures and weather, experts said.
In San Diego those food figures were even higher, with a 4.9 percent increase in food prices in July 2011 from July 2010. Food at Home spiked 5.8 percent in the same time frame while Food Away From Home, restaurants, rose 2.7 percent.
Locally, Gasoline jumped 25.6 percent in the first half of 2011 compared to the first half of 2010, when it rose 29.5 percent. Unleaded regular gasoline increased the most at 25.9 percent between the first half of 2010 and the first half of 2011 while unleaded premium rose 24.2 percent in the same period.
The dismal economy compounds the price increases because consumers have not seen their wages keep up with prices, if they are employed. Companies are also stuck with how to deal with the higher prices.
“It’s more difficult for individuals to keep up with prices when there is high unemployment that is keeping a lid on raises and wages,” Reaser said. “Companies are having difficulties too, they are reluctant to pass on these commodity price increases for fear losing market share and customers.”
…
“It’s more difficult to individuals to keep up with prices when there high unemployment that is keeping a lid on raises and wages.”
Which tells me that a lot of things will not be sold.
“Companies are having difficulties too, they are reluctant to pass on these commodity price increases for fear of losing market share and customers.”
Which means these companies are going to have to cut costs, and one of the ways they are going to do this is by cutting wage expenses. And the workers on the wrong end of these wage cuts are going to be the ones that will feel it.
But these guys won’t keep these feelings to themselves, instead they will pass on these feelings - the effects of their wage cuts - to others in our consumer-based economy who count on these no-longer-materializing wages to be spent.
And on and on it will go as this Great Contraction rolls relentlessly onward.
With other things equal, wage cuts + higher consumer prices = some combination of less sales of consumer goods and services, less consumption spending, lower monthly rental payments or lower home purchase prices, and lower savings.
MONEY
AUGUST 21, 2011
For Many Seniors, There May Be No Retirement
By RACHEL LOUISE ENSIGN
Rachel Ensign on The News Hub looks at why so many Americans are working past their 65th birthday because they can’t afford to retire.
When Angela Gregor’s mother became ill and needed long-term care in the 1990s, Ms. Gregor tapped her individual retirement account for funds and stopped making contributions. Then came the tumultuous stock-market ups and downs of the past decade, dealing the IRA another blow.
To make ends meet, Ms. Gregor went back to work part time last September, as a data-entry clerk at a senior center near Chicago. The 67-year-old hopes to retire by age 70, but says she’ll have a hard time doing so if she can’t sell her home.
“Everything is more expensive. I cannot retire, I wish I could,” says Ms. Gregor. “Like most older people, my money is in my home. … I’m caught between a rock and a hard place.”
Many older people are finding themselves in a position they never expected to be in at retirement age: still working or in need of a job.
And the laundry list of reasons just keeps growing. Already battered nest eggs took another beating this month with the market’s wild swings. With interest rates essentially at zero since 2008, income from Treasurys and certificates of deposit is pretty paltry. And the Federal Reserve recently said it would likely keep rates “exceptionally low” through mid-2013. On top of that, housing prices are still in the doldrums, leaving homeowners with much less equity to tap.
More than three in five U.S. workers in their 50s and 60s plan on working past 65 — and 47% of that group say they’ll do so because they’ll need the money or health benefits, according to a 2011 study from the nonprofit Transamerica Center for Retirement Studies.
But in this tight labor market, working into your golden years isn’t easy. And you’ll have to make your age and years on the job come across as assets, not liabilities. In addition, with the current market upheaval, you’ll need a financial plan that puts your savings on the fast track and takes into account how Social Security and Medicare benefits could be affected.
…
I took a coffee (latté) break during my morning bicycle ride. A young over-weight and heavily tattooed couple were there, eating and smoking and drinking…at the same time. Gross! I’d not want to depend on them for my retirement, and I would not be least bit surprised to see them using a SNAP food card at the grocery store.
“I’d not want to depend on them for my retirement,…”
Here’s to hoping nobody who posts here ends up in a nursing home where they are cared for by fat, gross, tattooed smokers…
“A young over-weight and heavily tattooed couple were there, eating and smoking and drinking…at the same time.”
Love trumps retirement.
I’ll repeat.
“Retirement” is entirely a 20 century western creation. A post agricultural, industrialized and mobile society needed a way to retire old workers and rehire new workers. The US is now post-industrial and the idea this idea of “retirement” has morphed from an employer driven need into BS talk like “I’m going to buy a vinyard after I retire”.
“Retirement” as defined by the braindead US public is nothing more than a fantasy. This is reality for everyone and it the publics reaction to this grim fact is near violent.
““Everything is more expensive. I cannot retire, I wish I could,” says Ms. Gregor. “Like most older people, my money is in my home. … I’m caught between a rock and a hard place.””
Ah, see, no, your money is not actually in your home. Your money is in the pocket of some buyer out there like myself.
Price it accordingly.
“When Angela Gregor’s mother became ill and needed long-term care in the 1990s, Ms. Gregor tapped her individual retirement account for funds and stopped making contributions.”
So much for the Generation Greed meme.
Social Security disability on verge of insolvency
By STEPHEN OHLEMACHER The Associated Press
Updated: 4:22 p.m. Sunday, Aug. 21, 2011
Posted: 5:06 a.m. Sunday, Aug. 21, 2011
WASHINGTON — Laid-off workers and aging baby boomers are flooding Social Security’s disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency.
Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs and can’t find new ones in an economy that has shed nearly 7 million jobs.
The stampede for benefits is adding to a growing backlog of applicants — many wait two years or more before their cases are resolved — and worsening the financial problems of a program that’s been running in the red for years.
Claims for disability benefits typically increase in a bad economy because many disabled people get laid off and can’t find a new job. This year, about 3.3 million people are expected to apply for federal disability benefits. That’s 700,000 more than in 2008 and 1 million more than a decade ago.
“It’s primarily economic desperation,” Social Security Commissioner Michael Astrue said in an interview. “People on the margins who get bad news in terms of a layoff and have no other place to go and they take a shot at disability,”
“Laid-off workers and aging baby boomers are flooding Social Security’s disability program with benefit claims, pushing the financially strapped system toward the brink of insolvency.”
Does unemployment qualify as a form of disability now?
The implication here is that the claims of disability are fake because it was really a case of inability to get re-employment
after a lay-off .
Desperate people do desperate things ,even fraud .
But doesn’t someone in the Social Security Administration have to agree on the disability status for the applicants to qualify for benefits?
I know these type of jobs exist, as a friend of mine used to screen disability benefit applicants for a living.
I didn’t get fraud out of it. What I got is that people who have been working in spite of disabilities, make a claim when they can no longer get work that they can do.
Chronic and increasing back trouble may make them unable to continue to do what they used to be able to do. Or perhaps they have a progressive disease like ALS and were trying to work as long as they could. Perhaps they were let go (instead of someone else) because their employer noticed their productivity falling.
If they are not yet old enough for Social Security or retirement, they may try to get disability instead. I thought the rules for Social Security disability were pretty stringent and that you could only collect if you were not fit for ANY work.
“Chronic and increasing back trouble may make them unable to continue to do what they used to be able to do.”
Had 2 neighbors in the last hood that were on full Social Security disability due to chronic back trouble. They were unable to work but they were able to play ball with the kids, work on their boats, fix their fences, build decks, ride bikes etc. They were both about 50 years old. I got fraud out of it.
“People on the margins who get bad news in terms of a layoff and have no other place to go and they take a shot at disability,”
These 2 guys proved it`s worth a shot.
I have no problem with legitimate Social Security disability claims. By contrast, fraudulent claims which go through uncontested will threaten to sink the system ‘faster than expected.’
Disability is the new welfare
It seems as though a cottage industry has sprung up in MSM journalism circles to write articles predicting imminent doom in global financial markets.
MARKETS
AUGUST 21, 2011
Market Rout Goes Global
European debt problems and fears of a renewed recession continued to plague the world’s stock markets last week. Stocks were up early in the week, but gave way to a selling panic later as bears from Tokyo to London to New York sold, sold and kept selling.
Tokyo’s Nikkei Stock Average fell 2.7% for the week, and London’s FTSE 100 dropped 5.3%.
The Dow Jones Industrial Average dropped 4% for the week while the Standard & Poor’s 500-stock index was down 4.7%. The Nasdaq Composite was off 6.6%.
But the weekly figures masked the volatility of the markets. The panic reached critical mass on Thursday as shares in Asia and Europe collapsed first. By the time markets opened in the U.S., the rout was in full swing. The Dow lost 420 points, or 3.7%. It fell another 173 points on Friday.
The Dow has fallen 11% in August and 15% from its April 29 high. It’s down 6.6% for the year.
In the flight to safety, investors piled into gold, which jumped to another new record, and into U.S. Treasury bonds. The 10-year note closed the week with a yield of 2%.
…
Take me out to the ballgame
Take me out to the crowd
Wear body armor and watch your back
You don`t know if you`ll ever come back
Cause they shoot, shoot shoot for their home team
They`ll beat and damage your brain
Cause it`s one, two , three shots lookout
At the old ball game
Police: Two shot in Candlestick Park lot after Raiders-49ers tilt
NFL.com Wire Reports
Published: Aug. 21, 2011 at 01:47 a.m.
Two men were shot and wounded in the parking lot of Candlestick Park after a preseason game Saturday night between the San Francisco 49ers and the Oakland Raiders, police said.
The shootings occurred around 8 p.m. PT, shortly after the 49ers’ 17-3 victory, police Sgt. Michael Andraychak said.
The victims are a 24-year-old man, who was hospitalized with life-threatening injuries, and a 20-year-old man, who was hospitalized and was expected to survive, Andraychak said. Their names have not been released.
The San Francisco Chronicle reported that police were holding a suspect soon after the shooting. San Francisco police Sgt. Frank Harrell described the suspect to the newspaper as a male adorned in Raiders clothing, adding that he was discovered on a party bus in an RV section of the lot.
The Chronicle reports that the 24-year-old victim was wearing an “(expletive) 49ers” T-shirt. He was in critical condition with two to four gunshot wounds to the stomach Saturday night at San Francisco General Hospital, according to the newspaper.
The 20-year-old victim was discovered near Pole V in the Candlestick lot, suffering from superficial wounds to the face, according to the newspaper. He was in stable condition at the hospital.
“We are treating it as separate shootings, but we believe they are related,” Harrell said.
The two victims and the suspect had all attended the game, Harrell said.
The Chronicle also reported that a third man, a 26-year-old from San Rafael, Calif., was hospitalized with life-threatening injuries after he was assaulted and knocked unconscious in a restroom at Candlestick during the game, according to police.
Police said a suspect was arrested.
The Chronicle reported that police had yet to establish a link between the shootings.
The 49ers issued a statement acknowledging the shootings and the investigation, but offering no further details.
The violence was not the first involving a San Francisco sports team’s game this year.
In March, San Francisco Giants fan Bryan Stow was severely beaten by two men in Los Angeles Dodgers gear outside Dodger Stadium after the teams’ season opener. He remains in a San Francisco hospital in serious condition with brain injuries. Two suspects have been charged in the case.
The operation of the U.S. federal government is increasingly resembling that of California’s state government these days…
Debt-limit agreement providing little help to congressional appropriators
By Erik Wasson - 08/21/11 12:25 PM ET
Congress is on track to be months late in funding the federal government, despite a debt-ceiling deal that provides appropriators with an overall spending level for 2012, aides and lobbyists said.
Part of the problem is the deficit supercommittee set up by the deal. Congressional leaders may want to wait until after its work has been put before Congress in December before moving forward with spending bills.
Failure to pass 12 separate appropriations bills by the end of the fiscal year on Sept. 30 has become a bad habit Congress can’t break. Because of this, federal departments are unable to plan effectively or start new initiatives when funding is provided under temporary bills.
Fiscal 2011 funding was not agreed upon until April. You have to go back to fiscal 2006 to find a time when Congress passed all the separate, detailed appropriations bills for agencies and even then multiple continuing resolutions had to be used to extend the deadline.
…
U.S. Stock Futures Drop Following Biggest Slump in S&P 500 Index Since ’09
By Rita Nazareth and Inyoung Hwang - Aug 21, 2011 3:51 PM PT
U.S. stock futures fell, indicating the Standard & Poor’s 500 Index may extend its biggest four-week drop since 2009, as investors weighed concern that the global economy is stalling with the cheapest valuations since 2009.
S&P 500 futures expiring in September declined 0.7 percent to 1,116.30 at 7:49 a.m. in Tokyo. The measure plunged 4.7 percent to 1,123.53 last week, giving it a 16 percent loss since July 22. A closing level of 1,090.88 would bring the index to a 20 percent decline since April 29, meeting the common definition of a bear market.
“People just want to stop the pain,” Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4 billion, said in a telephone interview. “They are looking for safety, stability and downside protection. Yes, the market is getting cheaper and cheaper, but not many people really care about valuations right now. Investors are concerned about a recession. The macro level is more important.”
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Did anyone notice that Obama is down to 1 or 2 original members of his economic team? At this point the only one left is Geithner and he wants out too. Clearly the White house will not be leading us out of the economic malaise with any really breakthrough ideas. So a fair number of HBB members are Ron Paul supporters (I was too in 2008) but one thing bothers me. Who would Paul bring in to office with him. Who would he be “allowed” to appoint to cabinet positions? I say this because when Obama got the nomination his slate of Dept. Secretaries was blank so nobody could have guessed he would bring in the worst of the Clinton economic team (Summers) and the worst of Wall St. (Geithner) with Paul Volker just to give us hope things might be different. I am now of the opinion that no mater who gets elected it always seems the cabinet gets packed with corporate insiders and this effectively limits the effectiveness of the president. Heck we could dig up and re-animate George Washington as President and I would bet Wall St. and the defense industry would still select all the Executive appointments.
I came home tonight, after a lovely day at the beach and a pool with my kids, and destroyed everything I had listed on craigslist and threw it all in my neighborhood dumpster.
Why? Rather than waste perfectly good stuff, if selling it is too much trouble why not just give it away for free on Craigslist?
The trouble with the 5 year view of San Diego is that it misses the full bubble runup and collapse. A much more informative perspective would be offered by the years 1996 through 2011 — the 15-year Housing Bubble and Bust view.
S.D. home market in the last 5 years [charts]
By Lily Leung, Reporter - Real estate
Friday, August 19, 2011 at 10:45 a.m.
July prices and sales were down in San Diego County - but how has the housing market fared over time?
Here’s a visualization of our area’s performance for the last five years using local real estate tracker DataQuick’s numbers, which reflect almost all county transactions.
To view, please click to enlarge the graphic.
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San Diego move-up market is debt underwater…
HOUSING: Lack of move-up buyers holding back house prices
By ERIC WOLFF ewolff@nctimes.com |
Posted: Sunday, August 21, 2011 7:00 am
Anyone want to buy a dream home?
Anyone?
With so many homeowners deep in debt, and so many more worried about the national economy, few people want bigger houses at current prices, and without that midlevel demand, there will be no steady increase in prices, said real estate agents and analysts interviewed last week.
In a traditional market, a segment of homeowners, with rising incomes and growing families, would sell their older places and use the profits as down payments on larger, more comfortable homes. But with local house prices well down from a 2007 peak, potential move-up buyers carry mortgages larger than what they could get selling their houses.
Also, local buyers may have a new outlook on housing: With so much uncertainty in the economy, they may decide their current houses are big enough.
Louis Galuppo, residential real estate director of the Burnham-Moores Center for Real Estate at the University of San Diego, was incredulous when asked about this kind of purchaser.
“What move-up buyer?” he asked. “The people that would normally be moving up today, they’re trapped. They can’t move.”
Read more: http://www.nctimes.com/blogsnew/business/realside/article_f0ab2436-6c8f-519c-ab96-aeaea055b3c4.html#ixzz1ViGzme8S
Op-Ed
The nation’s mortgage hangover is particularly bad in the Golden State. It’s time to let the free market fix the problem.
July 31, 2011|By Nicole Gelinas
There’s a reason California hasn’t seen as much of an economic recovery as some states: It has a serious debt problem.
The nation’s mortgage hangover is particularly bad in the Golden State. From 2000 to mid-2006, home prices across the nation doubled, outpacing inflation six times. In the Los Angeles area, things were much more extreme: Home prices nearly tripled. Prices in San Diego and San Francisco beat the nation too. And even though home prices have now plummeted, much of the debt that funded the bubble remains and is still hampering the economy.
The crisis has not affected all states equally. Some parts of the country have a lot of homeowners who owe more than their houses are worth, but they also had far lower home prices at the height of the bubble, so the amount each borrower owes is relatively low. In other places, such as New York, fewer homeowners are “underwater.” But because housing costs are high, these homeowners each owe a lot.
California ranks in the top five of both categories. Nearly a third of California homeowners with mortgages — 2.1 million families — owe more than their homes are worth, according to CoreLogic. And each of those borrowers is underwater by an average of about $93,000.
This all adds up to $196 billion in dead-weight debt in California that isn’t backed by property value. If home prices were to fall by an additional 5% — not an unlikely scenario — that figure would rise to $225 billion.
To put the numbers in perspective: $200 billion is more than twice the $79 billion in general obligation bond debt that Californians owe. State bonds, though, generally pay for something useful, like road repairs. Dead mortgage debt doesn’t pay for anything but a forehead-slapping “what were we thinking?”
It would cost California’s underwater homeowners more than $12 billion annually over 30 years to pay off this debt, even at today’s super-low interest rates. That’s money that people can’t save for retirement or their kids’ education, or can’t put into businesses to create jobs.
No magic wand can make all this debt go away, nor should it. Some people have good reasons for paying debt on bubble-era valuations. They like their houses, or they think it would be a moral failing to leave. Maybe they figure house prices will regain bubble-era heights in less time than it would take to repair credit scores after defaulting.
For people who aren’t sure, though, it’s past time for Washington to stop prolonging the suffering that comes with uncertainty. How? By letting the free market work.
Washington has attempted to intervene since the start of the crisis, but the interventions have only prolonged the pain. And elected officials have been reluctant to do the one thing that would make a difference: forcing lenders to accept responsibility for their bad lending practices.
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DOWN
Aug. 21, 2011, 8:13 p.m. EDT
Japanese shares weak in early trading
By Sarah Turner
SYDNEY (MarketWatch) — Japanese shares weakened on Monday, with the Nikkei Stock Average (JP:NIK -0.14%) down 0.1% at 8,708.74 as losses for exporters and energy companies amid continued worries about global growth offset gains for retailers. Auto giant Toyota Motor Corp. (JP:7203 -1.81%) shares fell 2.8% and Sony Corp. (JP:6758 -0.44%) shares declined 2.2%, while Inpex Corp. shares lost 1.3%. On the plus side, Fast Retailing Co. (JP:9983 +1.90%) shares rose 1%.
Why don’t Rick Perry or Sarah Palin inquisition Ben Bernanke about this story if they want to take the Fed to task?
Because I thought America expelled the aristocracy back in 1776; I now stand corrected.
Wall Street Aristocracy Got $1.2T in Fed Secret Loans
By Bradley Keoun and Phil Kuntz - Aug 21, 2011 4:01 PM PT
The Fed’s Secret Liquidity Lifelines
Citigroup Inc. (C) and Bank of America Corp. (BAC) were the reigning champions of finance in 2006 as home prices peaked, leading the 10 biggest U.S. banks and brokerage firms to their best year ever with $104 billion of profits.
By 2008, the housing market’s collapse forced those companies to take more than six times as much, $669 billion, in emergency loans from the U.S. Federal Reserve. The loans dwarfed the $160 billion in public bailouts the top 10 got from the U.S. Treasury, yet until now the full amounts have remained secret.
Fed Chairman Ben S. Bernanke’s unprecedented effort to keep the economy from plunging into depression included lending banks and other companies as much as $1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages. The largest borrower, Morgan Stanley (MS), got as much as $107.3 billion, while Citigroup took $99.5 billion and Bank of America $91.4 billion, according to a Bloomberg News compilation of data obtained through Freedom of Information Act requests, months of litigation and an act of Congress.
“These are all whopping numbers,” said Robert Litan, a former Justice Department official who in the 1990s served on a commission probing the causes of the savings and loan crisis. “You’re talking about the aristocracy of American finance going down the tubes without the federal money.”
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“…6.5 million delinquent and foreclosed mortgages…”
Is 6.5m a reasonable ballpark estimate of the current shadow inventory level?
Why or why not?
There is so much empty, defaulted but not listed inventory out there it’s not funny. And this is everywhere I’m looking. Upstate NY, downstate NY, VT, DE. You name it, it’s there.
6.5m is the largest estimate of shadow inventory I have come across to date. Don’t you just love how the Bloomberg writer casually tosses that statistic out there as though it’s common knowledge?
“…$1.2 trillion of public money, about the same amount U.S. homeowners currently owe on 6.5 million delinquent and foreclosed mortgages.”
Gotta wonder what the original total value of those 6.5 million mortgages was worth, not just the $1.2T that is in arrears.
Not sure, but I can offer a simpler calculation:
$1.2 trillion owed on 6.5 million mortgage averages out to $1,200,000,000,000 / 6,500,000 = $185,000 owed per mortgage.
Aug. 21, 2011, 9:00 a.m. EDT
Will hard data confirm recession surveys predict?
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — This much we know: confidence for consumers and businesses alike has deteriorated to recession levels.
But can surveys accurately predict a recession? Is weak confidence enough in itself to cause an economic contraction?
Some economists say the mood of consumers and business leaders has been a sure-fire way of forecasting weakness in the real economy.
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Hulbert: “Bottoms usually are messy.”
Yoo-hoo — paging FPSS!
Calling the Bottom Amid Steep Selloffs and Crashes
Aug. 18, 2011
It’s rare that we’re at the bottom when so many market observers are calling one, according to MarketWatch columnist Mark Hulbert, who says bottoms are “a process rather than an event.” Laura Mandaro reports. Image courtesy of Getty Images.
I keep reading about how Wall Street is looking towards Wyoming for signs the Fed will rescue stock market investors who recently lost a bundle. Other than signaling a vague future willingness to do something, I am having a hard time imagining what the Fed could possibly do at this point to bail out Wall Street traders from recent stock market declines.
Bloomberg
U.S. Index Futures Fall, Oil Drops on Growth Concern
August 21, 2011, 10:25 PM EDT
By Shiyin Chen
(Corrects size of S&P 500’s four-week drop in fifth paragraph.)
Aug. 22 (Bloomberg) — U.S. stock futures slid, indicating the Standard & Poor’s 500 Index may extend its largest four-week losing streak since 2009, and oil sank on speculation the global economy is stalling. The yen and Swiss franc weakened on concern Japan and Switzerland will weaken their currencies.
S&P 500 Index futures expiring in September declined 0.5 percent as of 8:08 a.m. in Tokyo. Nikkei 225 Stock Average futures slipped 0.2 percent in Chicago. Crude lost 0.7 percent in New York. Gold increased 0.6 percent, a sixth day of gains, and silver climbed 1.8 percent. The yen slid 0.4 percent to 76.85 per dollar after rallying last week to a post-World War II record and the franc lost 0.3 percent against the U.S. currency.
The four-week rout has wiped out more than $8 trillion in global equity values and dragged the MSCI All-Country World Index down 19 percent from its May 2 high. Central bankers from around the world will meet in Jackson Hole, Wyoming, this week amid record-low yields on U.S. Treasuries that show traders expect Federal Reserve Chairman Ben S. Bernanke to signal the central bank will begin a third-round of asset purchases to boost the faltering economic recovery.
“A lot of the traders and investors will wait to see what comes out of the Fed meeting in Wyoming this weekend,” Don Williams, chief investment officer at Platypus Asset Management Ltd. in Sydney, said in a Bloomberg Television interview. “We’ve had three very violent weeks so it’s more likely that we’ll get a consolidation week this week.”
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LAW
AUGUST 22, 2011
Foreclosure Talks Snag on Bank Liability
By RUTH SIMON, VANESSA O’CONNELL and NICK TIMIRAOS
Efforts to reach a settlement that would end the long-running probe of foreclosure practices are snagged over whether banks will get broad legal immunity from state officials for mortgage-related claims.
Federal and state officials are seeking penalties of $20 billion to $25 billion from Bank of America Corp., J.P. Morgan Chase & Co. and other financial firms under investigation since last fall. The banks are pushing hard for a deal, but they have insisted on a wide-ranging legal release from state attorneys general.
“They wanted to be released from everything, including original sin,” said a U.S. official involved in the discussions. The legal protection sought by the banks included loan origination; securitization and servicing practices; fair-lending procedures; and their use of the Mortgage Electronic Registration Systems, an industry-owned loan registry that often acts as an agent for owners of mortgage loans, people familiar with the discussions said.
“The reason the banks would settle or pay anywhere near $20 billion to $25 billion is to get this behind them,” said one person familiar with the banks’ thinking. “There’s no reason the banks would pay that amount of money and leave their flank exposed.”
U.S. and state officials dismissed the push for broad immunity as a “nonstarter,” according to a federal official involved in the talks, but they have countered with a narrower offer. It would cover robo-signing and other servicer-related conduct but leave banks open to potential legal action for wrongdoing in fair lending and securitization, according to people familiar with the situation. Attorneys general in California, Delaware, Massachusetts and New York have said they are investigating mortgage-securitization practices.
Illinois Attorney General Lisa Madigan, shown in 2009, said in regard to a settlement with banks that ‘we are not releasing fair-lending claims.’
“Those of us at the table…have maintained this investigation is about robo-signing and loss-mitigation problems,” Illinois Attorney General Lisa Madigan said in an interview. “The release should be narrowly drafted to cover those issues.”
The debate over the release is one of the most contentious issues facing banks and government officials, who began formal settlement discussions in March, and must be resolved for a deal to proceed.
Federal officials are aiming for a settlement by Labor Day, with some insisting that making a deal soon would give the housing market a much-needed boost and avoid the risk of a protracted legal showdown with the banks. The foreclosure machine has been sputtering since the issue came to the fore last fall, though banks insist their procedures resulted in few or no wrongful foreclosures.
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OPINION
AUGUST 22, 2011
The Bond Bubble and the Case for Stocks
BY JEREMY J. SIEGEL AND JEREMY SCHWARTZ
A year ago in these pages, in a piece called “The Great American Bond Bubble,” we wrote that yields on Treasury bonds were unsustainable and those rushing into bond funds were in for a rude awakening when interest rates rose. Long-term rates did in fact rise sharply last fall, but recently, on the heels of the economic slowdown and the Federal Reserve’s “pledge” to keep interest rates low for the next two years, U.S. Treasury rates plunged to even lower levels than last summer, reinflating the bubble to the bursting point.
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Money Markets And More Archives
Aug. 15, 2011, 5:13 p.m. EDT
Most of us don’t have $1,000 for an emergency
If you suddenly needed cash, could you come up with $1,000? Gail Cunningham of the National Foundation for Credit Counseling tells MarketWatch Radio’s Adrienne Mitchell that most Americans couldn’t.
Stocks: Fear takes center stage
By Ken Sweet, contributing writer
August 20, 2011: 9:51 AM ET
Gold keeps hitting record highs as fearful investors turn to the metal as a safe haven. Click the chart for more data on commodities.
NEW YORK (CNNMoney) — Nervous investors hoping for a reprieve this week will be disappointed.
The past month has been nothing but a disaster for stock market investors. The S&P posted its biggest four-week loss since March 2009. Meanwhile, safe haven plays like gold and U.S. treasuries have soared, with gold hitting a new record high day after day.
This week will be fairly quiet as far as scheduled economic and company events, but fears about the U.S. possibly heading into another recession and the financial crisis in Europe are expected to weigh heavily on trading.
The big event for investors will be on Friday, when Federal Reserve Chairman Ben Bernanke will give his keynote speech at the Kansas City Fed’s annual retreat in Jackson Hole, Wyo.
Bernanke is faced with a turbulent and declining market combined with investor fears that the U.S. economy is heading into an economic downturn, just as he was when he appeared at the same event one year ago.
At the time, the Fed chairman reassured investors by raising the possibility that the Federal Reserve would do another round of quantitative easing in his speech. The central bank implemented that plan a few months later.
Investors aren’t sure what to expect from Bernanke on Friday. Some believe he will bring up the possibility of a third round of quantitative easing - commonly nicknamed QE3. Others think Bernanke will only re-emphasize the central bank’s statement from earlier this month, when the Fed said it planned to hold interest rates at near-zero levels for at least two years.
Either way, investors hope to see some sort of clear leadership from the Fed chairman.
“What’s worrying the markets is the perception that there isn’t much more that can be done by the Fed and politicians,” said Rob Lutts, chief investment officer with Cabot Money Management. “All three — the White House, the Fed, and Congress - are in a bind that I have never seen before.”
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Bernanke’s last resort: Start dancing?
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8717120/Goldman-Sachs-shares-plunge-after-chief-Lloyd-Blankfein-hires-high-profile-lawyer-Reid-Weingarten.html
Lloyd Blankfein (#2 2008 Obama contributor and provider of “former” employees who run US economic policy), has fired a high profile defense lawyer. Oh my….