Bits Bucket for August 27, 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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~ An excerpt from The Market Oracle
ROOT OF NATIONAL ILLNESS
In my view, the national illness is a toxic USEconomy dominated by pervasive profound grotesque insolvency. In the early part of the 2000 decade, a strong hint of near-term future failure was obvious. The USEconomy shed its industry to Asia since the 1980 decade. In the early years of last decade, the migration of factories was to China. In its place, the US consumers relied upon home equity withdrawal, blessed as good by the American economists and high priest of heretical ideology Alan Greenspasm. The hint to sound money economists such as the Jackass from the dependence shift was a clear signal of ruin in a few years, as in now. It came on time. In my view, the national illness is a toxic US financial sector dominated by pervasive insolvency and massive fraud. The FASB accounting rule change permitted grotesque falsification of the bank balance sheets, reflected in market capitalizations above zero. The value zero has been and still is more accurate, still is the price target. The big US banks continue to fight off the powerful forces of a housing market in resumed chronic decline, sovereign bonds overseas beset by heavy losses, and a spate of bond investor lawsuits that rack up. All attempts to limit lawsuit exposure have failed. Litigants line up in court like Wal-Mart shoppers on a big sale. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.
The Achilles Heel, the broken leg, the ruined road, and the toxic field is HOUSING & MORTGAGES. The contaminated blood, the leaking gangrene into the circulation system, the sewer line in the water supply is BANKING & FINANCE. The USEconomy grew dependent upon the two-sided asset bubble. No resolution or remedy or liquidation means rotting flesh and gangrene on the body economic. Americans have noticed. The US banking system remains insolvent, worse each quarter from toxic assets. Home prices have resumed their decline, despite all incorrect announcements by banking, political, and economic leaders over public address propaganda loudspeakers. The crowd control devices are not working, as the people are deeply worried. The banks are plagued by an REO inventory bloat extended from home foreclosures, where they do not dare release all the homes onto the already bloated market for sale. The banks are peppered in attacks by bond investor lawsuits, which work to resolve the bond fraud from misrepresentation of mortgages packaged in AAA toxic bundles. They lost 30% to 60% in a matter of months and a few years. The banks have a dirty secret of hundreds of thousands of home loans operating in strategic default, whether the homeowners refuse to pay anything more on their mortgages, often demanding to see the proper title on the property. The news media will not cover this story. In every court challenge, the banks have lost the cases, resulting in the homeowners taking clear title with the loan fully forgiven. The newest threat to the banks is the next Option ARM wave, the second round of adjustable rate mortgage that will continue in a storm until 2013 ends. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.
No meaningful home loan balance scheme conducted by the USGovt means the housing mass & mortgage connective tissue circle the toilet in a flush. The reason is simple. Home loan balance reductions would expose gigantic bond fraud in tracing the mortgage bonds to home loans with title registrations. It would result in exposure of Fannie Mae counterfeit bonds having circulated widely. It would result in forced bank asset writedowns amidst the pervasive accounting fiction at work on the balance sheets, blessed as good by the FASB. It would expose MERS as a fraudulent device to hold titles without legal standing. It would embolden half the nation into civil disobedience, as in outright refusal to pay banks on home loans. It would expose the nation as insolvent generally. It might interfere with some perverse national plan to use Fannie Mae as some devious device to become landlord to one third of the nation’s homes, a plan of collectivism that Karl Marx might approve. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.
“The newest threat to the banks is the next Option ARM wave, the second round of adjustable rate mortgage that will continue in a storm until 2013 ends.”
Newest threat — really?
Some of us HBBers have had our eyes on that hurricane for years already. Don’t even look at high-end coastal property until after the 2013 Jumbo mortgage ARMs reset storm surge has left billions more in underwater defaulted mortgages in its destructive path.
Cantankerous: Glad to have you back. Now we can try to talk PBear out of voting for Obama (again).
Now we can try to talk PBear out of voting for Obama (again) ??
And talk him “into” voting for whom ??
EXACTLY!
“talk him into”?
Can you get any dumber than that? The ideologues might consider living out their beliefs rather than attempting to persuade people to do something. It’s far more productive.
I live on the fence, politically speaking. In fact, for the first time since I have been of legal voting age, the thought recently crossed my mind of possibly not even voting for a presidential candidate in the Fall 2012 election. Given all the candidates’ eagerness to get into bed with Wall Street banksters, I don’t expect to face a real choice.
Not voting is a vote for the winner…So, sometimes you must hold your nose and punch the card…At least that’s how I see it…
You could equally argue that a no vote is a vote for the loser and it made absolutely no difference anyway …
A philosopher would rip your position a brand new @ssh…
“A philosopher would rip your position a brand new @ssh…”
Either way you’re still voting for the business party:
http://www.youtube.com/watch?v=2HvGy2gY0eM
Not voting is saying that you think other people are better qualified to choose than you are.
I don’t see how anyone can believe that the possible Supreme Court nominees would be the same, but if you don’t care about that and you actually believe there is no other real difference, then maybe other people are more qualified than you to make the choice.
You could equally argue that a no vote is a vote for the loser ??
No vote ?? last time I looked at the ballet there were no punch slot for a “no vote” so I assume by “no” you mean you did not vote at all…In 2008 I voted for Obama mainly due to the fact that my alternative was MaCain/Palin (Emphasis on Palin)…If I choose not to vote and MaCain/Palin won the election didn’t my lack of voting for Obama help them ??
“Not voting is saying that you think other people are better qualified to choose than you are.”
Voting is saying you are sufficiently deluded to believe you have a realistic chance of being the median voter — the one whose vote actually tips the election outcome. What’s worse, unless the vote is evenly split, the median voter’s choice has no bearing on the results. You have about as high a chance of winning the lottery, except the lottery payout is much higher.
oooh…. the kenyan muslim cannibal is a boogeyman…… be skeeerd Martha!
“It might interfere with some perverse national plan to use Fannie Mae as some devious device to become landlord to one third of the nation’s homes, a plan of collectivism that Karl Marx might approve.”
When you reflect on it a bit, it isn’t really just Fannie Mae of which Karl Marx might approve. Rather the whole history of U.S. federal housing policy back to the early decades of the 20th century, back to the time of the Bolshevik Revolution, when the big push began to make every U.S. household a homeowner household, looks like a failed experiment in Marxist economics.
The big question now seems to be whether anyone in a leadership role in housing will have the vision to move away from decades of failed housing policy and pave a path towards restored financial and social stability. So far, I see no evidence to suggest this will happen.
Let’s get rid of Section 8, too.
If properly managed, Section 8 can work well. But the key word in the previous sentence is “properly.”
Which means that you can’t just sit back and collect rent checks while your tenants trash the property and run down the neighborhood.
Case in point: I live just a few yards away from an apartment complex that accepts Section 8 tenants. And, but for a few boom car and chronic barking noise disturbances this past winter, the place has been quiet enough to not annoy me. That’s more than I can say for many of my closer neighbors.
One of the things this complex does is have a zero tolerance policy toward, shall we say, negative activities.
In the case of the aforementioned barking problem, I called the property’s resident manager in the wee hours of the morning. And he was extremely polite to me, said he’d send the tenant a warning letter, and encouraged me to report the barking disturbance to animal control. I made the report. And I heard no more from the barking dog, which was also disturbing other tenants in this complex.
As for the boom car problem, that happened after the aforementioned resident manager left to take another job. And let’s say that his successor wasn’t God’s gift to property management.
So, since she was useless, I reported the disturbances (there were several) to the Tucson Police Department and to the presidents of the two neighborhood associations in this area. Both of those presidents know one of the co-owners of this apartment complex, and I’m sure he was brought into the loop very quickly.
The upshot of the above: Those boom cars quickly found another neighborhood to serenade.
So, you consider that is the “job” of owners of property to spend their time trying to defend their property from the onslaughts of a bunch of parasitic slobs and their general behaviour, a “properly managed” model.
I have news for you, having dealt with rentals and the welfare cases that often take up residence under government run programs……….
ALL the rules favor the tenants who will trash your properties and demand that you provide new appliances, carpeting, and repairs to windows and fixtures after the trash them.
Government agents will come in and declare you properties “unlivable” and DEMAND that you bring them up to code and standards, like replacing all the window screens that were torn out……..it’s an endless headache and a losing proposition.
The only solution is to allow the OWNER to “Discriminate” as to who he/she will or will not rent to.
The government won’t allow it, so he/she will be involved in court cases to maintain a decent property.
I have a MUCH simpler solution.
Get the government out of people’s lives so people who want to rent properties can rent them to responsible people and the have the Courts less interested in blaming the landlord for everything that goes bad.
The GOVERNMENT has no business providing housing to people.
Comment by Diogenes (Tampa, Florida)
Been wondering what happened to you; good to see you posting again.
+ 1 Diogenes
The only solution is to allow the OWNER to “Discriminate” as to who he/she will or will not rent to.
The government won’t allow it…
“[L]andlords, though required to meet fair housing laws, are not required to participate in the Section 8 program. As a result, some landlords will not accept a Section 8 tenant. ”
wikipedia
I understand the idea behind Section 8, but it screws other people who live in the apartment complex, not just in behavior but in rent hikes.
Exactly. It’s bullsh!t.
The article’s first statement says it all:
“In my view, the national illness is a toxic USEconomy dominated by pervasive profound grotesque insolvency.”
This “grotesque insolvency” will translate - is translating - into the non-delivery of trillions of dollars of promised money. Those who will depend - are depending - on these trillions of dollars are going to have to somehow find a way to do without.
“Grotesque insolvency” means there is a grotesque shortage of money.
“Grotesque insolvency” leads to the massive writing down of the value of assets. Assets are what back up the promises of money. If there are no assets to back up the promises then the promises will not be kept.
This is what deflation looks like for those who are slow in getting it.
“This “grotesque insolvency” will translate - is translating - into the non-delivery of trillions of dollars of promised money. Those who will depend - are depending - on these trillions of dollars are going to have to somehow find a way to do without.”
As long as we can keep paying the “minimum payment” on the massive debt… which remains low due to engineered ST rates… the debt will never have to actually be repaid. Perpetual economic “growth” was supposed to keep the minimum payment manageable.
Just like an individual w/ a high credit card balance… as long as he can make the minimum payment.. & keeps getting raises… he never actually HAS to pay back the principal.
Wonderful business model, no?
IOW as long as we can keep kicking the can down the road then we will never have to stop kicking the can.
But when you come to the end of the road then something other than kicking the can will have to come into play.
And we seem to have reached the end of the road.
There is no end of the road- it’s a Nascar track.
How does your deflation scenario factor in the Bernanke Fed’s adamant refusal to ever allow deflation to occur here?
Bernank is already “allowing” deflation. He (the Fed) has inflicted about as much pain as he can get away with to slow the collapse of the banking ponzi game, but it doesn’t look like our Fed can actually stop the process.
In case you haven’t noticed Bernanke is now having to fight for everything he wants to do. He didn’t used to have to fight, now he does.
There didn’t use to be any questioning of trillion dollar loans going to banks all over the globe because people did not know it was going on, but now they do and they are pissed.
The easy days for Bernanke are behind him.
My prediction: Before next year’s election, Bernanke will step down.
He’ll probably go back to the economics department at Princeton, where he was chair for many years. And I’ve heard that he was quite good at that role.
In case you haven’t noticed Bernanke is now having to fight for everything he wants to do. He didn’t used to have to fight, now he does.
Why is that? What has changed?
People are paying attention? Incumbents feeling the heat?
“Before next year’s election, Bernanke will step down.”
Do you have any predictions for the timing of the Treasury Secretary’s exit?
And what about replacements; will they be selected from the same gang that oversaw the financial crisis, subsequent bailouts, and endless extend-and-pretend delay of eventual recovery?
Or will a new leadership be brought in to reinstate a rule of law and to restore trust in the American financial system?
“There didn’t use to be any questioning of trillion dollar loans going to banks all over the globe because people did not know it was going on, but now they do and they are pissed.”
Was it patently illegal for the Fed to summarily appropriate trillions of dollars to banks all over the world? I thought only Congress had the authority to do this sort of thing. Has the Fed turned in to the world’s largest hedge fund? OR has it always operated as a ginormous hedge fund, whose questionable discriminatory lending practices are only now in plain view, thanks to Bloomberg?
The most outrageous aspect of all is that the bailed out banksters can legally(?) use the ill-gotten profits they earned off their below-market-interest liquidity life lines from the Fed to lobby politicians for weaker regulations which could otherwise be enforced to end their outlaw financial racket. And now, the rescued firms are using the full force of their ill-gotten financial fire power to foreclose on Main Street America. What a scam!
Wall Street Aristocracy Got $1.2 Trillion in Secret Loans
By Bradley Keoun and Phil Kuntz - Aug 22, 2011 5:19 AM PT
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.”
…
Great synopsis of our current quagmire.
Meanwhile, typical Americans are more concerned with the Kardashians, American Idol & Monday Night Football… than with the reality that the entire US Financial sector is BANKRUPT.
Until the general masses collectively remove their heads from their a$$es.. there is no long-term hope other than just more of the same. Don’t expect any politician to have the political courage to do the right thing. We, as voters, do not demand it of them.
Sad.
Don’t forget typical American’s preoccupation with his or her own personal flavor of fundamentalist Christianity.
Religion Could Give Perry Edge Over Romney
Tuesday, 09 Aug 2011 04:50 PM
By Andra Varin
Mitt Romney has been leading the polls for the GOP presidential nomination, but Rick Perry could change all that in a heartbeat.
Rick Perry, The Response, prayer, religion, president
Texas Gov. Rick Perry on the big screen at “The Response” prayer rally he hosted Saturday in Houston. (Getty Images Photo)
Perry has been giving increasing signs that he will enter the race. The Wall Street Journal reported Tuesday that Perry would “all but announce his candidacy” in a speech Saturday in Charleston, S.C., and formally launch his bid as soon as next week.
And that could spell big trouble for Romney.
As governor of Texas, Perry will be able to appeal to Southern voters in a way the former Massachusetts governor cannot. And the evangelical Christians who had hoped to be voting for Mike Huckabee might flock to Perry instead.
Romney’s Mormon faith has made some conservative Christians uneasy. Perry, on the other hand, worships at an evangelical church and is fresh off hosting “The Response,” a daylong prayer rally that attracted 30,000 to a Houston stadium.
“That’s the brilliance of what Perry has done here,” David Weigel wrote of The Response on Saturday in a Slate piece titled “And God Will Send Rick Perry.”
…
Is Perry running for Commander in Chief or Televangelist in Chief?
He’d probably get a higher share of the Bible Belt vote if he pitched himself as Prayer Leader in Chief.
I could care less if he goes to church every day and has a statue of Mary in every room of the house.
Will he stop the fraud?
Will he prosecute the fraudsters?
Will he bring down insane federal spending?
“Will he stop the fraud?”
Communists are nice people -
Stalin, Pol Pot, Castro, Mao, etc.
Socialism/Communism is the Opiate of the masses.
They all want the “free cheeze”.
Marx just wanted people to abandon religion for Socialism.
His dream was realized in many places the the detriment of every place it has been tried.
Will he stop the fraud?
Will he prosecute the fraudsters?
Will he bring down insane federal spending?
It’s pretty obvious that he will do no such thing. He’s indebted to the same interests. Bank of America to Perry: “We will help you out!”
If it’s just gonna be the same oligarchs in charge, might as well vote for Obama again. I’d rather not have the religious foolishness on top of everything else.
“I’d rather not have the religious foolishness on top of everything else.”
That’s why I will likely vote for Obama again. I can’t stand to listen to politicians in a country where separation of church and state is part of our constitution pandering to religious zealots.
“Marx just wanted people to abandon religion for Socialism.
His dream was realized in many places the the detriment of every place it has been tried.”
Would it work better if some country enacted pure socialism int the NAME of religion? As in, a country that modeled its economic policies straight from the teachings of Jesus Christ? Marx may have been right about religion being the opiate of the people, but that’s no reason to abandon it.
He’s a typical American Imperial Governor. It is highly unlikely he will put a stop to the rampant fraud that’s predictably undermining the empire. His career involves participating in imperial rule over the common man, not in opposing it.
http://en.wikipedia.org/wiki/Rick_Perry#Industrial_policy
“Perry has appointed at least four top donors or fund-raisers to the board of the Teacher Retirement System, a $110 billion pension fund. Perry’s trustees encouraged the fund to invest more money with hedge funds and private equity firms whose investors, officers, or partners were Perry donors.”
Perry’s imperial tenure shows no particular acknowledgment about the insidious marriage of banking and business to government. His words about fiscal conservatism have generally been undermined by his actions about raising public funds in other ways, like bonds (which are just more borrowing, which incur greater costs later, and bonds always earn banks fat FAT fees for underwriting them).
“I’d rather not have the religious foolishness on top of everything else.”
And so would 100% of sane US citizens.
“there is no long-term hope”
Those who do not share your view will rebuild and you will be the beneficiary.
In order to “rebuild”…. people must first wake up & demand that there is change.. real change. Until then, you can only expect more of the same. Today’s headlines will be same a year from now. To wishfully believe that one day.. everything will be magically alright.. is misguided.. & borderline delusional.
Real, long-term vision & courage is required to make big change. Focus on short-term solutions seems to be the play of the day… worldwide (I’m looking at you, Europe).
The downside of “kicking the can down the road”.. is that there appears to be a perpetual financial emergency… one that spoils LT investment.. & spooks consumer spending. It’s a self-feeding loop. Economists are shocked that GDP & consumer demand is low… when all everyone hears about is the instability of Wall Street, Gov’t Debt, Inflation, etc.
You summed up the truth. Nobody wants to buy the truth, unfortunately its sales appeal is just not there. Spun-BS is what sells these days and is what we can expect until the end. Sooner or later we all are going to die anyway. How much BS we have to endure in the meantime is the only variable.
Interesting information on Hurricane Irene. Apparently, the real problem is not so much the wind, but the massive amount of water the storm is pushing. I had this thought that this is how sea level rise manifests: you get a storm like this, and then the water just sort of doesn’t quite recede back to its former levels.
Anyhoo, if you’re an HBBer along the Eastern Seaboard, hunker down and stay safe. And if you’re in the storm right now, but still connected, what’s going on? Do tell.
“…you get a storm like this, and then the water just sort of doesn’t quite recede back to its former levels.”
Locally or everywhere? Currently or permanently?
A long-term rise in the sea level all over the world due to a storm like this would be quite disturbing, but somehow also surprising.
P.S. According to my parents, a hurricane hit landfall in Florida while I was a suckling infant. I was too tired to even notice; according to Mom, I slept right through it.
About 24 hours for storm surge to go down after storm.
Storm Surge is the biggest problem, Cat 1 (hope it stays that way) wind damage to a decent structure shouldn`t be a huge problem, tornadoes that form in the eye wall can be as in (Andrew) although a much smaller and powerful storm. Interior rooms (no windows) the place to be. If the eye of the storm goes over you, be advised the back side is coming. After the storm passes watch out for down power lines. Best of luck to RAL and everyone else in the path.
This explains it better than I can.
Damage Hurricanes Cause–Winds and Storm Surges
Damage-Causing Winds
Hurricanes produce damaging surface winds and storm surges. While high winds cause significant structural and environmental damage, storm surges are frequently the most devastating element of a hurricane.
Storm Surges
A storm surge is a rise in sea level along a coastline caused by the combination of a hurricane’s surface winds and the physical geography of a coastline. Surface winds above the ocean’s surface push water toward the hurricane’s eye, creating a mound of water. The mound of water is then influenced by the slope of the coastline as the hurricane approaches land. If the coastline is shallow, water cannot flow away from the mound and the mound grows. If the coastline is deep, water can disperse and the mound may grow slowly or disperse depending on hurricane strength. An example of a shallow-water coastline is the Gulf Coast while an example of a deep-water coastline is found in New England.
Predicting Worst Storm-surge Damage
The greatest storm-surge damage is to the right of a hurricane’s eye (as you face the shoreline) in the Northern Hemisphere. It occurs to the right of the eye because winds, ocean waves, and sea-level rise are all moving in an onshore direction. In contrast, to the left of the eye, ocean waves and sea-level rise are moving in an onshore direction, but the winds are blowing in an offshore direction. The offshore direction of the winds moderates the effect of the storm surge.
http://www.comet.ucar.edu/nsflab/web/hurricane/313.htm - 7k
About 24 hours for storm surge to go down after storm. As long as you are not below sea level,
New Orleans is below sea level.
What about lower Manhattan? Perhaps it is not technically below sea level, but I suspect many banks are under water, if only we knew their true balance sheet picture.
” but I suspect many banks are under water, if only we knew their true balance sheet picture.”
Maybe Bernanke can print some land and save everyone.
Perhaps you are thinking of how sand dunes pile up. Or debt.
Irene’s path is projected to go directly over us.
I have but one request dear god of all hurricanes.
Can you make one little detour over DC when Congress and the Senate reconvene? And turn the dial up just a wee bit. You see we need a bit of housecleaning done around here.
Oh and there’s one more thing. Grant safe passage to Oxy, Polly, and any other HBBer before performing your much needed handiwork.
Your humble wage slave,
SV
Nothing going on here yet. Very light breeze, a couple sprinkles. All the emergency prep is done.
There have been a few showers, less time with moderate rain and almost no wind. One of the stores has plywood over all its windows and doors. They spray painted “store open” on most of the panels.
Now the grocery stores? They looked like a tornado had gone through.
By the way, if anyone in the area is interested, Julius Caesar at the Shakespeare Free for All is great.
I hate hurricanes.
It looks like Irene is going to be a real rain maker. It’s a big, slow moving storm and the ocean supplies an inexhaustible supply of moisture. My concern is for the damage that flooding will do, even in areas not on the direct path.
Good luck to all in the east coast states.
I’ve been trying to reach my parents in eastern PA. Getting a message from Verizon saying that the line has been temporarily disconnected.
Probably more weirdness from Verizon. I couldn’t get through a few weeks ago, and there was some other funky message that my folks were unaware of until one of their friends told them about it.
But, nonetheless, I am concerned.
I had just started my life as a renter in 2005 when Hurricane Wilma came. It was supposed to weaken before it got to PB County because it had to travel over land. It didn`t, in fact the second side of the storm was worse because the front half got back over the ocean and it strenghtened. Anyway, I didn`t have anything to board up 2 sliders with and seeing how it wasn`t supposed to be that bad I didn`t buy anything for the LL just used what he had (mistake).
The glass was breathing to the point I thought it was going to blow out through both sides of the storm, ultimately it did not. But the one thing it did do was give me a view of the water (big hole they dug in the middle of the community to use for fill) and the flock of ducks that lived there. The ducks get out in the middle of the water where there is very little chance of anything wind blown hitting them, put their bills down and swam into the wind (100 mph gusts) when the eye passes they turn around and do the same thing with the wind coming from the other direction. The ducks did fine, a palm tree crushed the bed of my F250.
Wow! Good for the ducks! (Sorry about your truck).
Went out for a jog this AM before the fun begins.
Verizon trucks out in force. I must have saw at least a dozen.
Prepositioning? Preventative work?
FPL is sending crews up north today.
My only worry is power outages. I have an entire summer of berries down in the freezer.
Hint #1: If there’s going to be any storm that may knock out power, immediately throw your bottled water into the freezer. It will freeze before the storm hits, and will keep the freezer cold.
The farmer’s market was busy today, people loading up on bags apples and boxes of tomatoes. I was quite surprised to see the crowds. Are they going to can tomato sauce during a hurricane? Meanwhile, the local Giant wasn’t crowded at all. I guess people did all their preparing ahead of time.
Hint 2: If you’re low on batteries before a storm, go to Best Buy. Home Despot and Target will be mobbed, but who’s going to Best Buy? And of course they are well stocked.
The last storm we had was a sudden wind that kicked up everything and stopped dead about 2 minutes later. It was so strong that I thought that a tornado had touched down about a block away. Even then, my power was out less than 24 hours. This time the crews are already on standby. So I think it’ll be okay.
And that’s reminiscent of Agnes. Lots of rain driven flooding inland.
That`s a start. When you don`t have power and you are running out of food and fresh water, gold isn`t worth much to you no matter what it is selling for an ounce.
Irene knocks out power to nearly 200,000 homes
By CHRIS KAHN The Associated Press
Posted: 10:10 a.m. Saturday, Aug. 27, 2011
Nearly 200,000 homes in North Carolina are without power as Hurricane Irene slams into the state.
Winds of up to 80 miles per hour whipped ashore Saturday morning, ripping power lines from poles and snapping trees in half.
Hardest hit were Wilmington and Wrightsville Beach, N.C., where Progress Energy reports 190,000 customers without power. Most of those customers are residences.
“We expect those numbers to increase,” Progress spokeswoman Julia Milstead said.
Sunny day, no wind here Palmy. When U getting up this way?
Economic forecast:
Three months from now, the next leg down in the Great Recession will be blamed on this month’s weather, with perhaps an earthquake thrown in to the explanation, for good measure.
To his credit, the CIC has not been caught flat-footed during the course of this storm, the way his predecessor was by Hurricane Katrina.
27 August 2011 Last updated at 07:27 ET
Hurricane Irene nears North Carolina as millions flee
More than two million people on the US east coast have been told to evacuate their homes as Hurricane Irene nears, packing winds of 90mph (150km/h).
The mayor of New York has ordered an unprecedented evacuation of a quarter of a million people living in low-lying parts of the city.
Irene’s hurricane-force winds have now begun to pummel North Carolina’s coast, already knocking out powerlines.
Seven states from North Carolina to Connecticut have declared emergencies.
US President Barack Obama has warned Irene could be “a historic hurricane”.
He has urged people in the projected path of Hurricane Irene - the first hurricane of the Atlantic season - to take precautions.
“Don’t wait, don’t delay. We all hope for the best, but we have to be prepared for the worst. All of us have to take this storm seriously,” he said on Friday, before cutting short his holiday in Martha’s Vineyard on the Massachusetts coast, to head back to Washington.
…
Couldn’t Obama just have told the waves to stop? He is Hawaiian.
Well, he did promise to cool the earth if elected.
Or was that Al Gore?
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Buy gold between 2001 and 2009…lots of it.
Buy gold sparingly now, interspersed with T-bills. Two more years of ZIRP before the firsst uptick will cause a $500 per ounce price drop.
But bear in mind that there is no reason ZIRP cannot be reinstated for an ‘extended period’ if green shoots have not magically reappeared by 2013.
ZIRP and Chindia buyers are the big reason for gold’s multi year surge. Take away ZIRP and you still have Chindia buying gold as an alternative currency. No intrinsic value in paper money or gold, but given a choice, which would you prefer to hold?
I’m guessing Chindians could dump a lot of gold in a hurry as well in a crash. They are the tail of the dog that is going to get wagged to the breaking point when the gold bubble pops, as there is no plunge protection or political cover for individual investors in gold.
They will dump bonds before they dump precious metals.precious metals are nit tied to the fiat economy, that being the American mixed economic system, which is merely on life support.
The Fed’s cut-rate, endless-panic interest rates are providing a great fundamental underpinning for the gold bubble.
The Wall Street Journal
HEARD ON THE STREET
AUGUST 27, 2011
Bubbly Gold Might Take a Bath
By LIAM DENNING
Is there a gold bubble?
In one respect, gold always is in a bubble. An inert metal in every sense, gold has no intrinsic value as an asset so buyers focus primarily on its resale value. This search for the greater fool is characteristic of bubbles. Yet gold having accelerated this year, the question of whether it is now too expensive takes on new urgency.
Compared with other bubbles, gold’s rise actually looks tame. In the 10 years leading up to Aug. 22, when gold closed at a record nominal peak of $1,888.70 a troy ounce, the price had risen 587%. In comparison, crude oil rose almost tenfold in the decade preceding its all-time peak in 2008. But neither hold a candle to Nasdaq: The index climbed more than 2,000% in the tech-crazed decade that ended in March 2000.
Justifying further gains on the basis that we don’t yet seem to have lost our marbles to quite the same degree as last time isn’t terribly convincing, though. Other comparisons provide similarly unclear results. Deutsche Bank calculates that, in real terms, gold has surpassed its 1980 peak when adjusted for both U.S. producer and consumer inflation. That suggests the price is extreme already. On the other hand, Deutsche also reckons gold compared with the price of oil or the S&P 500-stock index suggests scope for a move toward $3,000.
Another way of assessing gold’s bubbliness is to look at the main arguments in its favor.
One is that gold hedges against a falling dollar. Yet gold’s 22% gain since April has happened while the dollar hasn’t really moved. Another is that gold offers a hedge against rampant inflation. Yet that looks unlikely with weakening developed economies and monetary tightening in major emerging ones. Gold also is touted as a store of value. Yet the history of the past few decades suggests it can be terrible in this regard for long periods of time. Rising price volatility also counts against this argument.
Gold’s real underpinning is real interest rates near or below zero, reducing gold’s opportunity cost and reinforcing a sense of crisis. Tellingly, the most recent rally since July coincided with a renewed plunge in real rates: The yield on 10-year Treasury inflation-protected securities dipped below zero for the first time in the data series’ history.
…
So, the question is if we are in a ZIRP bubble. Is it sustainable?
Since the dollar is already down by 98% against gold over the past 40 years, I am guessing the ZIRP bubble is not sustainable. However, I honestly agree with the gold bugs that we could have a lot more inflation and nominal gold price appreciation from now until the ZIRP bubble pops.
Good luck to all gamblers during the Fed’s ‘extended period of low rates.’
Yeah, us and Aladinsane are taking a bath with $1790 gold.
It’s too early to tell yet whether this crash has legs. My guess would be no — i.e., gold has a few more legs up ahead before the mother of all crashes when the Fed finally ends ZIRP. But this is just a guess, and I note that ZIRP is already fully priced in.
I will add that we are in the mature stage of bubble formation where the new money heading into gold falls primarily comes from two types of investors:
1) Clever people gambling on continued price increases, assuming they will be able to get to the exit in the inexorable future collapse before losing money.
2) Clueless people who will inevitably lose money in the collapse.
Since the debt ceiling works so well to reign in debt in the U.S., Spain is adding one as well.
Economy | 26.08.2011
Spain follows Germany, France and writes debt ceiling in constitution
Spanish flag is raised
Spain’s economy is struggling to get back off the ground
Spain is to amend the constitution to enshrine a public debt ceiling in the constitution, following similar measures in Germany and France. The government also set out labor reforms to combat high unemployment.
Spain’s ruling Socialists and the opposition center-right Popular Party agreed on Friday to put a constitutional limit on public debt, in an effort to contain its debt crisis. The government also announced reform measures to combat unemployment of over 20 percent.
Starting in 2020, the long-term national deficit cannot exceed 0.4 percent of gross domestic product (GDP). The threshold can, however, be exceeded in times of natural disaster, a recession or other, extraordinary circumstances. The federal government will have to stick to a debt ceiling of 0.26 percent of GDP, the largely autonomous regions to 0.16 percent of GDP.
“The constitution will take in the principle of long-term budget stability so that Spain does not incur a debt that ends up seriously mortgaging our future,” Socialist Party Campaign Chief Elena Valenciano said.
…
“The threshold can, however, be exceeded in times of natural disaster, a recession or other, extraordinary circumstances.”
IOW there is no threshold.
Spain’s debt ceiling amendment is just a bunch of words.
By the year 2020 I promise to have all of my borrowings paid off and lose 40 pounds.
Cierre la puerta de granero después de que el caballo esté fuera.
What’s this? Something about closing a barn door after the horse has left?
Barn door left ajar
All the horses are long gone
Quickly — shut the door
Bernanke Will Step Down Within 18 Months
Submitted by Phoenix Capital Research on 08/26/2011
Ben Bernanke will be steeping down as Fed Chairman within 18 months.
The political environment is changing rapidly in the US. Take a look at a few key developments in the financial community:
1) 2012 Presidential candidates making the Fed a hot button
2) Dissenting votes increasing at the Fed
3) Fed Presidents openly criticizing Bernanke’s policies
4) Lloyd Blankfein hiring a defense lawyer
The picture is clear when you connect the dots. For starters, the mere fact the Fed is even being mentioned by Presidential candidates (I’m discounting Ron Paul who’s been criticizing the Fed for decades) tells you that things have changed in a big way in the US: the Fed was seen as the savior of the world a mere two years ago.
I fully believe the Fed (and the economy) will be a primary issue for the 2012 Presidential election. In simple terms, Bernanke will be lumped in with Obama (as well he should) and criticized openly by any and all contenders.
It’s clear that several Fed Presidents have picked up on this and are now distancing themselves from Bernanke and his policies. This is a wise move for any Fed official who wants to maintain his/ her post or who wishes to be a future Fed Chairman: the next Fed Chairman will have to be much more hawkish.
However, it’s the final issue, Lloyd Blankfein’s hiring of a defense attorney, that tells me Bernanke will be stepping down and possibly even facing legal battles. The reason for this is simple: any and all Wall Street execs will very likely hang the albatross for corruption and thievery around Bernanke’s neck.
We’ve already had a taste of this with Ken Lewis at Bank of America. The reason Bernanke got through that mess was because everyone was still so worried about the “recovery” and stocks rising.
With another Crisis already at our doorstep, the litigation is going to be fast and furious. Blankfein is just the beginning. We’re going to see more investigations, more lawsuits, and more accusations of lies and corruption.
Do you really think Wall Street CEOs are going to let themselves be the scapegoats for this? All they have to do is say, “we did it because the Fed told us to,” and the legal focus shifts over to Bernanke.
Remember, Bernanke is just an academic figurehead. The REAL power in the financial system lies with the Primary Dealers (who include BAC, GS, and all the other firms who will be coming under increased scrutiny in the future). And these guys are not going to let themselves be sacrificed. No, they’re going to roll everything they can onto Bernanke.
With that in mind, I believe Bernanke will step down within the next 18 months. The only reason I give him this long is because he will likely go down after the 2012 election ends. Of course, with the Financial System on Red Alert today, it could happen a lot sooner than that.
Indeed, I fully believe we have entered the Second Round of the Great Crisis: the Sovereign Default Round. What’s coming will involve stock crashes, civil unrest, food shortages, bank holidays and more.
With another Crisis already at our doorstep, the litigation is going to be fast and furious. Blankfein is just the beginning. We’re going to see more investigations, more lawsuits, and more accusations of lies and corruption.
My prediction: Before too long, we’re going to hear the announcement of U.S. v Goldman Sachs.
If this comes to pass then I think Goldman Sachs will have better lawyers.
“Indeed, I fully believe we have entered the Second Round of the great Crisis: the Sovereign Default round. What’s coming will involve crashes, civil unrest, food shortages, bank holidays and more.”
The Sovereign Default round is The Broken Promises round.
Many promises have been made, few will be kept.
Cash …
Well the first round was about broken promises too…FBs promised that they’d make a series of mortgages payments that in the end they were unable or unwilling to make good on. Realtors promised that “RE only goes up.” Lenders promised that “you can always refinance before the rate goes up.” and Wall Street promised that those bonds were “AAA, almost as good as treasuries.” None of those promises turned out to be worth much.
How about the slow thousand cuts routine, for the next 20 years or so?
“Many promises have been made, few will be kept.”
I’ve met too many productive people who have no idea that the poor living in dependency have higher priority at the trough.
Some of those “productive” people will find themselves losing the game of musical chairs and will become one of the “poor living in dependency”. A lot of today’s “poor living in dependency” used to be “productive”.
“With another Crisis already at our doorstep, the litigation is going to be fast and furious. Blankfein is just the beginning. We’re going to see more investigations, more lawsuits, and more accusations of lies and corruption.”
Don’t hold your breath…
Any chance that Ben’s and Tim’s exits will be followed up by a full investigation of what played out in the 2008 bailouts? Because I, for one, would be quite interested to know whether the Treasury was fully involved in the unauthorized multi-trillion “no banker left behind, anywhere on the planet” too-big-to-fail bailout which followed the Fall 2008 Wall Street collapse. I should think that financial historians would want to set the record straight on what actually played out, so that we could avoid a repeat any time over the next few centuries to come.
It’s incredible there’s been no Pecora commission.
Realtors Are Liars®
Minnesota Dad Leaves Son Behind in Foreclosed Home - NewsCore
LAKEVILLE, Minnesota – A desperate dad fleeing foreclosure left behind his 11-year-old son a week before they would have been evicted from their home, the St. Paul Pioneer Press reported Friday.
Steven Alexander Cross fled during the night while his son, Sebastian, slept in their Lakeville, Minnesota home, located 25 miles south of Minneapolis. The property was in foreclosure and the owner had received an eviction notice.
The father left a note of instruction for his son, telling him to take his PlayStation and go to a neighbor’s house when he woke up.
“If this paper is wet, it’s because I am crying so bad,” he wrote to the boy before making his escape July 18. “You know your dad loves you more than anything.”
Cross, 60, also drafted a second letter, explaining his struggle to find work as an architect in the down economy.
After the boy awoke to find himself all alone, he went to the home of neighbor Joanne Pahl with the letters.
“He started to cry,” another neighbor said about the incident. The child is currently in protective custody and will soon be placed with a relative.
“For a parent to abandon a child under these circumstances — it is both unusual and disturbing,” Dakota County Attorney James Backstrom said.
Officials still have not located Cross but he is believed to possibly be hiding in California.
He has been charged with gross misdemeanor of child neglect and a warrant has been issued for his arrest.
Sad. At least he did not do the stupid thing and do a murder-suicide.
At least the dad didn’t kill his entire family, self included, which happens with disturbing frequency these days in families facing financial distress around San Diego County.
Deaths of Pimienta family detailed in report
By Debbi Baker, Reporter - Police & fire
Pauline Repard, Reporter - Public Safety
Originally published August 3, 2011 at 1:16 p.m., updated August 3, 2011 at 7:20 p.m.
SAN DIEGO — Autopsy results released Wednesday in the May murder-suicide of a Skyline family revealed that the husband weighted himself down in the swimming pool and his wife and daughters were forcibly drowned.
The autopsies, completed Saturday by the county Medical Examiner’s Office, shed no new light on a motive for the deaths of Alfredo Pimienta, 44, his wife, Georgina, 38, and their daughters, Priscilla, 17, and Emily, 9.
San Diego police homicide investigators have said the family was in financial distress, but they have not given details on the nature or extent of the couple’s money problems.
…
The dad is a moron.
China’s About To Outfit Its Subs With Controversial “First-Strike” Nuclear Warheads - Robert Johnson | Aug. 27, 2011- Business Insider
While adding to its stockpile of almost 200 nuclear warheads, China is on the verge of arming itself with a new highly effective, multi-stage nuclear weapon.
The Washington Times devoted some attention to the new Pentagon report on China’s military strategy and found the CCP is developing this third missile to compliment its medium and long-range nukes.
The Pentagon says China is developing its first mobile intercontinental ballistic missile equipped with a multiple independently targetable re-entry
MIRVs
Put simply, this means the Chinese are creating a “first-strike” warhead that was hotly contested for its destabilizing effects during the Cold War and could increase their nuclear stockpile exponentially.
The Soviets wanted to ban MIRVs completely as early as the late 1960s.
MIRVs are mobile, can be put inside submarines and carry multiple warheads, capable of striking several targets, or just one target far more effectively than traditional missiles.
The Russians, who already admitted to helping China’s fighter jet program, have highly advanced MIRV technology in their RSM-56 Bulava submarine missile which just went into serial production.
China’s new warhead will compliment its new Jin-Class ballistic missile submarine the Pentagon says “appears ready” to enter the CCP fleet.
In addition to sending MIRVs out with its submarines China is also storing its warheads in underground facilities connected by 3,000 miles of “obscure tunnel network[s]“.
Richard Fisher, of the International Assessment and Strategy Center told the Times, “Taken together, a well-protected, growing ICBM force that will soon have active defenses should be of great concern to the United States,”
“In addition to sending MIRVs out with its submarines China is also storing its warheads in underground facilities connected by 3,000 miles of “obscure tunnel network[s]”
That’s amazing.
The bulk of our nuclear deterrent is based on our missile submarines.
China isn’t going to nuke the US. Mainly because it will make all those US dollars they are holding worthless. Their nukes are mainly intended to prevent us from attacking them.
Which is what my formula is for curtailing US overseas misadventures. The US thinks long and hard about screwing around with countries that have nukes. Maybe we should be cheering the Iranians on in their efforts.
Better yet, just give nukes to every country in the world where we might be tempted to start something.
Until and unless we arrest our descent into Banana Republicanism, we have no business telling anyone else how they should be running their affairs. Or promoting our brand of “freedom”, when the typical Juan/Xian/Abdul 6 Pack has more “freedom” than we do.
Paid for Barbie Doll and Nike exports to the US.
We always keep hearing about how our defense budget is X times as much as the rest of the world’s.
The truth of the matter is we are paying “bubble prices” for our military personnel, when compared to China.
If China/US payscales were matched, China’s military budget would equal our own.
As I’ve stated before the answer is obvious. Outsource some of our military operations to the Chinese. Starting with Afghanistan.
It took me awhile to figure out the pattern to wmbz’s posts.
I think I’ve craked it. All his posts are intended to induce fear to drive people to gold.
Well you wasted your time, I could not care less who does or doesn’t buy gold. Why would I care? I don’t sell gold for a living.
The general population (J-SP) doesn’t buy it, they sell the stuff they bought at discount jewelry stores, to pay some of their bills.
What’s your hang up about gold? You don’t own it, don’t understand it, so just leave it alone. You’ll be just fine without it.
I don’t have a hang up about gold. As far as a commodity goes, its more rare than copper… but of course, doesn’t have near the industrial use.
What I don’t understand is peoples’ false belief that gold is money or a currency. I don’t get this obsession that a gold based monetary system is someone superior to a fiat currency. The moment a bank makes a loan using a gold not, it is promising the gold to two people and the real value of the note is the person that needs to get them to repay their debts, and therefore, is no more stable than a fiat currency.
Gold is just a rare commodity, and one that may look pretty, but just doesn’t have many uses other than decoration, and this false belief by so many that it has some magical properties of underpinning a sound monitary debt system.
You don’t suspect that you are fighting a 5,000 year history of gold being a value to head back to when a currency collapses.
Are you sure about that? Which currencies collapsed 5,000 years ago?
All of them?
I don’t have a hang up about gold. It is just another commodity. I don’t understand why the gold bugs have a hang up about gold.
It has no magical power to create a stable monitary system, as demonstrated by the many periods of inflation and deflation that occured even when most nations in the world were on a gold standard.
There isn’t enough gold to be an effective currency. Somewhere around 140K tonnes at about 35.25K ounces per is right about 5 billion ounces of gold in the world. 7 billion people on the planet means less than an ounce per person.
Even if you made coins 1/10th pure gold and each coin 1/10th of an ounce, that is like 71 coins per person on the planet.
Gold isn’t money… It isn’t even a particularly useful commodity. it is an expensive decorative item.
Gold isn’t money… It isn’t even a particularly useful commodity. it is an expensive decorative item.
What do you call the dollar bills that continue to lose value day after day?
“What do you call the dollar bills that continue to lose value day after day?”
Other peoples’ debt.
They have value as long as ohters need them to repay their debts. If people give up trying to get them, defualt and get teh debt written off as uncollectable, then the dollars go away.
But, even on a gold standard, the vast majority of dollars in cicrulation were debt dollars. Banks would have 5, 10 or more times as many notes in circulation as physical gold backing them up.
This is why we had just as many booms and busts, periods of inflation and deflation on the gold standard as on a fiat money system.
The key to a stable money supply is not what backs up the money. The key is keeping the amount of debt to an amont that can be repaid, for individuals and by summation, the economy as a whole.
if they nuke us they’ll never get paid back.
Wow, total lockdown mode here in NYC. Never seen the town so empty. Might need to grab my camera and take some pictures!
For once in my life, I truly wish I were in NYC.
That panic here in downstate NY is absurd.
To be fair, it IS kinda a big deal. Might be absolutely nothing at all but you have to prepare.
A direct smack and you are looking at a lot of damage.
“but you have to prepare”
That`s a good idea, not a good idea to take these storms too lightly.
N.C. reports first death due to Irene
A man was crushed by a large limb that blew off a tree.
I can’t figure out the eggs and milk panic buying thing. First thing that will happen is taht you’ll lose your power. Second thing that happens will be that you lose all the stuff in your refrigerator.
Sound to me like a hurricane warning would be a nice excuse to go on a road trip to visit relatives.
Have told my daughters that the first order of business if/when a tornado hits the house, is to go get a week long reservation at a hotel that still has power, as close as possible to the homestead.
That’s where the real shortage is going to be.
“I can’t figure out the eggs and milk panic buying thing. First thing that will happen is taht you’ll lose your power. Second thing that happens will be that you lose all the stuff in your refrigerator.”
The first and second day after a storm passes you are eating pretty well. Steaks, hamburgers or what ever you had in the freezer is cooked on the grill. After that it is on to the canned stuff that you should have stocked up on to last you a week or more along with the water supply. We were without power for about 14 and 10 days with Jean and Frances. Then it starts to be a bit of a b#tch. The first one of those 2 we got some MREs (after abut 11 days) from the Army who had drop sites around. But at that point it`s a drag because you have to watch your gas because you can`t get any. And you start to wonder what if this lasts another week? How we all live is pretty fragile and it wouldn`t take too much or too long for all heck to brake loose.
Not only a direct smack, but I just noticed a comment on CNN that the smack to NYC will occur at 8AM tomorrow….during high tide. Good luck…
Hey RAL,
The REO realturd” There are two offers already, better get yours in…” ( didn’t even see the place yet) has been calling my machine every day. LOL
N@R=Scripts R Us
Of course. Multiple offers I’m sure….. Because people are scooping up “homes”.
I honestly thought along similar lines to the advice conferred in this article back when investors crowded into safe havens back in Fall 2008. I was utterly shocked to see the subsequent loss of 50% or so of the U.S. stock markets’ value by the end of March 2009.
So this time around, I am taking any articles claiming that now is the time to exit safe havens with a VERY LARGE grain of salt. With a bad roll of the dice across the pond, the Eurozone debt crisis could dessicate money out of the financial system as quickly as the financial tornado triggered by the Lehman Brothers collapse did back in Fall 2008.
If Wall Street is good at anything, it is very good at luring greater fools to catch falling knives. DON’T FALL FOR IT, MAIN STREET AMERICA!!!
UPSIDE
AUGUST 26, 2011, 5:51 P.M. ET
It’s Time For a Flight From Safety
Treasurys, Swiss francs, gold and defensive stocks look too pricey to be safe. Consider these alternatives.
By JACK HOUGH
It’s time for a flight from safety.
When economic clouds gather and markets turn choppy, investors often stampede into Treasury bonds, recession-resistant stocks, Swiss francs and gold.
But that can make these reputational safe havens less safe in practice, as their prices bloat up while those of less-hallowed assets become more attractive. Gold, for example, briefly tumbled more than $200 an ounce earlier this week as stocks rallied.
For investors whose excessive “safety” now poses a risk, here are some unloved assets to dip into.
Treasurys look preposterously crowded. Five-year notes recently hit a record-low yield of barely 1%. Consumer prices have lately risen at their typical pace of more than 3% a year, meanwhile.
In other words, the safest bet on short-term Treasurys is that they’ll make investors a little poorer.
Corporate bonds, meanwhile, look abandoned. The Barclays Capital U.S. Aggregate Bond Index, a benchmark for investment-grade bonds, yields about 3.7%–double the normal spread against the 5-year Treasury.
Even “junk” bonds, which have been pounded lately, could be attractive. The Merrill Lynch High Yield Index has a yield of 8.6%, which suggests investors anticipate a 7% default rate, says James Swanson, chief investment strategist for MFS Investment Management.
That isn’t unthinkable; defaults briefly hit an annualized rate of 9% during the 2008 credit freeze. But the default rate is just 1.1% now, meaning the economy would have to get much worse from here. Yet banks have built up capital cushions, while publicly traded nonfinancial companies have 12% of their assets in cash, the most since 1954, says Mr. Swanson.
…
I got to meet the guys who actually manage my 401K at my new job.
Told them I wanted to sign up for the riskiest investments with the highest returns. If it returns less than 5%, I’m losing money anyway. The sooner everyone thinks of their 401K money as the equivalent of “nickel slot machine/Indian Casino” money, the better.
Safe investments are for losers.
I’ve fad 100% of my new 401(K) allocations going into stock since spring 2008. So far, so good…
I am purely aggressive in my 401k. Have been since 1996. The old 401ks are now IRAs, still purely stock mutual funds, still aggressive.
A townhome near me in Long Beach CA just sold for $660K . This is at least $125k more than I thought it was worth.
Why would a buyer lose all that money as soon as it closed?
Well, you could be wrong about the value. Who knows?
Also, does anybody who know who invented the word “townhome”? My guess is that, for at least 100 years, the word townhouse was used. What was wrong with that word?
toast
Where did you get the sale price?
If it was an auction failure/sold REO, it might be showing the loans(s)/liability(ies). Usually the case, btw.
Zillow still isn’t accurate.
Use the county recorder’s data or county tax info
There isn’t a house on the planet worth half that amount.
Fannie and Freddie, taken over by the government in 2008 to stanch the financial bloodletting, need
a major overhaulto be wound down.Fannie-Freddie Bailout Could Cost Taxpayers $1 Trillion
Published: Tuesday, 29 Jun 2010 | 10:22 AM ET
By: Reported by Steve Liesman, written by Michelle Lodge
For American taxpayers, now on the hook for some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans, that amount could be just the tip of the iceberg.
According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, some experts caution, the cost to the taxpayer could hit as much as $1 trillion.
Two things are clear: Taxpayers don’t want to foot the bill, and Fannie and Freddie, taken over by the government in 2008 to stanch the financial bloodletting, need a major overhaul.
“Some of us who don’t even own homes are paying to support others and their home ownership, and they ask ‘why?’” said Robert J. Shiller, a Yale University economics professor and co-creator of the S&P/Case-Shiller Home Price Indices.
…
I remember when $1T was the total national debt and seemed like a huge number. After addin $5T to the national debt in the last 4 years…. $1T seems like chump change.
According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, some experts caution, the cost to the taxpayer could hit as much as $1 trillion.
Hope and Change Baby…! Four more years!!!!
U.S. Move to Cover Fannie, Freddie Losses Stirs Controversy
WSJ
Dec 28, 2009
By JAMES R. HAGERTY and JESSICA HOLZER
The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.
The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.
“and Fannie and Freddie, taken over by the government in 2008..”
See how that works?
The assumption that McSame would be doing anything different than Obama on the bailouts is pure fantasy.
Bush proposed stimulus checks, and McCain voted yes. McCain voted for TARP. Voted for Freddie/Fannie take over. Supported GM and Chrysler restructuring…
Before I vote against Obama, first there has to be an opponent that isn’t worse than him. The leading 3 media appointed Republican front runners are all, in my opinion, far worse than Obama.
The only person worse than a man with no plan or vision, is a person with a really, really, REALLY bad plan and vision.
Can’t say Poole was wrong about this prediction:
Op-Ed Contributor
Too Big to Fail, or to Survive
By WILLIAM POOLE
Published: July 27, 2008
CRITICS of the Congressional housing package complain that we are now committing taxpayers to huge new outlays to rescue Fannie Mae and Freddie Mac. That view is wrong: Congressional inaction over the past 15 years had already committed taxpayers to the bailout.
Congress could and should have required Fannie and Freddie — which enjoy a peculiar and highly advantageous status as quasi-public agencies and quasi-private companies — to maintain more capital, but didn’t. Now the costs from Congressional inaction are becoming painfully apparent, and they cannot be avoided. To permit the two mortgage giants to default would set off a worldwide crisis. But we can decide what should become of Freddie and Fannie after this crisis. The best option is one getting little mention in Washington: get rid of them.
Because the government cannot permit Fannie and Freddie to default, their obligations are part and parcel of the full-faith-and-credit obligations of the United States. Thus, the national debt, usually viewed as the $5 trillion held by the public, is really $10 trillion once we add the Fannie and Freddie obligations and the mortgage-backed securities they guarantee.
For now, the Congressional Budget Office has entered a “place holder” of $25 billion to cover the bailout costs over the next two years but recognizes that this is a guess. The important issue is not the 2009 outlay, but the total that will be required eventually. Even if the two firms are technically insolvent, the market will continue to buy their obligations readily, for it understands that they are fully backed by the government.
Given this faith on the part of the marketplace, there will be no immediate catastrophe that would force the federal government to provide additional capital to Fannie and Freddie. The situation is similar to the one in the 1980s, when many savings and loans were technically insolvent yet had no difficulty attracting deposits, as they were covered by federal deposit insurance. So the federal government has the option of delaying any ultimate resolution of the Fannie-Freddie mess, as it did with the savings and loans 20 years ago, in hopes that the two giants can dig themselves out of the hole. Still, it seems more likely that — again, just as in the 1980s — the longer we delay, the higher the eventual taxpayer cost will be.
Freddie Mac, according to its own fair-value accounts for the end of March, is technically insolvent — the estimated market value of its liabilities is greater than the estimated market value of its assets. Fannie Mae has a small positive net worth. In coming quarters, these figures may deteriorate because of accounting adjustments (some of the assets are questionable) and continuing defaults on mortgages. The eventual losses could run to several hundred billion dollars.
Whatever the amount of the bailout, even if “only” $25 billion, the real question is not immediate survival of the loan giants but their long-term future. Instead of being regarded as too big to fail, we should look at them as too big to liquidate quickly.
…
Can someone kindly remind me how U.S. taxpayers got collectively saddled with the tab for the GSE collapse? Because a decade ago, when they were immensely profitable, they operated as private entities, with all the gains accruing to their shareholders. Once they collapsed to the tune of hundreds of billions of dollars, the liability somehow became the problem of Main Street taxpayers. Their too-big-to-fail “privatize profits, publicize losses” business model worked like a charm.
Fannie-Freddie Fix at $160 Billion With $1 Trillion Worst Case
By Lorraine Woellert and John Gittelsohn - Jun 13, 2010 4:00 PM PT
The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.
Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.
“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.
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My 11-year-old son was freaked out by the goofus in the “California Homeowners are using this Ridiculously Easy Trick…” ad in the sidebar. “What the heck is he doing,” asked my son.
This seems to have become the global sovereign debt crisis which simply will not go away.
Aug. 26, 2011, 5:36 a.m. EDT
Collateral spat sparks new Greek default fears
Finland’s insistence on getting collateral stirs controversy
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — Little more than a month after euro-zone leaders presented a united front on a second rescue package for Greece, a spat over collateral and other issues is renewing fears of a potential default.
Finland last week reached a deal with Greece that would see Athens provide cash guarantees in return for Helsinki’s participation in the 109 billion euros ($157 billion) rescue plan. That caused an uproar in capitals across Europe, with Austria on Wednesday saying it would ask the collateral terms to be applied to all countries participating in the plan.
Germany has said it can’t back a plan that favors Finland over other countries.
Subsequent talk has centered on the possibility of coming up with a plan that would see Greece offer collateral to all bailout participants. European officials will discuss the issue later Friday, Greek Finance Minister Evangelos Venizelos told the country’s parliament, Dow Jones Newswires reported.
Regardless of the outcome, the conflict marks a “very, very dark episode in policy-making in Europe,” said Piet Lammens, head of markets research at KBC Bank in Brussels.
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There has never been a better time to kill the messenger whose message you dislike.
Man behind US credit downgrade rejects blame for market rout
Standard & Poor’s David Beers rebuffs criticism and says developed economies need to address debt problems
Phillip Inman and agencies
guardian.co.uk, Friday 26 August 2011 19.36 BST
Article history
US vice-president Joe Biden has suggested the downgrade of the US credit rating led to the resignation of S&P’s boss.
Photograph: Zhang Jun/Corbis
The man behind Standard & Poor’s downgrade of the US credit rating said on Friday the agency was not to blame for August’s stock market rout, and warned that developed nations still needed to “get their act together” to tackle their debts.
S&P cut the United States’ prized AAA rating one notch to AA+ on 5 August, exacerbating a sell-off in global stock markets that had already been hit by Europe’s growing sovereign debt crisis and fears of a renewed US recession.
“From our perspective, it’s an oversimplification to say this was happening because of S&P’s downgrade,” said David Beers, S&P’s global head of sovereign ratings, referring to criticism that the move caused volatility in the market.
S&P is one of three main firms that analyse the creditworthiness of businesses and sovereign states, along with rivals Moody’s and Fitch. They have faced severe criticism for their failure to predict the credit crunch and subsequent bank insolvencies.
S&P’s officials have said the US downgrade was mostly based on their view that politics in Washington has become too divisive to ensure more deficit-reduction measures are adopted next year.
The US vice-president, Joe Biden, said he believed the downgrade was excessive and the resignation of the S&P president, Deven Sharma, this week was recognition by the firm that it had been wrong to be overly cautious.
World stocks, as measured by MSCI’s All-Country World Index, have fallen more than 17% from their May high as markets lose faith in the ability of politicians in rich economies to tackle debt burdens.
In Europe, investors are increasingly worried that eurozone leaders have been unable to contain the debt crisis that has swamped Greece, Portugal and Ireland and now threatens bigger, much harder to save economies such as Spain and Italy.
Japan, meanwhile, with a public debt twice the size of the $3tn economy, is looking for its sixth leader in five years after prime minister Naoto Kan confirmed on Friday his intention to step down.
“We’re waiting to see if the governments can get their act together and address both the short-term and long-term issues,” Beers told journalists at a press conference in Singapore, referring to developed countries in general.
He added that monetary and fiscal tools that could be used to boost sluggish economic growth would be of limited use if households in rich nations continued to focus on reducing their own debt rather than spending.
“One of the lessons that we’re perhaps learning from this crisis, and this applies to many countries, not just the US, is the limits of what these sorts of fiscal and monetary policies can achieve,” Beers said.
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How is Boehner’s leadership in the debt ceiling negotiations working out for him?
Boehner approval rating down in Ohio poll
John Boehner is pictured. | AP Photo
Public Policy Polling survey found that Boehner’s approval rating is down to 34 percent. | AP Photo Close
By JAKE SHERMAN | 8/26/11 2:20 PM EDT
Updated: 8/26/11 4:31 PM EDT
Nearly half of Ohioans disapprove of John Boehner’s job performance as speaker of the House, while a third approve, according to a poll released Friday.
The Public Policy Polling survey of 792 participants in Boehner’s home state, found the Ohio Republican’s approval rating has slid to 34 percent, down three points since May. The poll, conducted in August, found 47 percent disapprove of the job that Boehner is doing, while 19 percent of respondents are undecided.
Though PPP’s findings generally match nonpartisan polls, it is a Democratic firm — hardly friendly to a 20-year Republican member of Congress like Boehner. A drop is to be expected as Boehner’s speakership progresses and he becomes a more central figure in the daily machinations of national politics.
Read more: http://www.politico.com/news/stories/0811/62149.html#ixzz1WIBRzXNA
Rep. Gohmert Calls for the Resignation of Geithner and Bernanke
August 12, 2011
Liberty Alerts, U.S. House
Rep. Louie Gohmert (TX-01) released the following statement regarding S&P’s downgrade of The US credit:
“For the first time in the history of the United States our credit is no longer considered among the safest in the world. Only a year ago, Treasury Secretary Tim Geithner was asked if our out of control spending and massive deficits could lead to a downgrade. His reply, “Absolutely not. That will never happen to this country.” Could he have been more callous?
America is facing the most significant financial crisis since the Great Depression. With nonexistent economic growth and steady 9% unemployment in the last three years, both Geithner and Federal Reserve Chairman Ben Bernanke have proven to the American public and the world that they are not up to the task of solving our fiscal problems. They both continue to pursue the same failed economic policies despite overwhelming evidence that they have been sadly ineffective, so they both need to do the right thing for this country and resign.
It is time for both of them, as people with significant influence, to take responsibility for misleading the U.S. by stating that raising the debt ceiling without vast cuts in spending would avoid a downgrading of our credit rating. Resignations should be forthcoming from anyone leading our nation’s financial sector who continues to fail the heeded and repeated warnings of the rating agencies. Since we were assured by Geithner and Bernanke that such downgrading would never happen, their assertions on anything in the future will engender neither hope nor change.”
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“America is facing the most significant financial crisis since the Great Depression. With nonexistent economic growth and steady 9% unemployment in the last three years, both Geithner and Federal Reserve Chairman Ben Bernanke have proven to the American public and the world that they are not up to the task of solving our fiscal problems.”
The financial crisis is our $40T in debt.
Geithner and Bernanke are not up to the task of solving it, because only CONGRESS has the power to make the necessary changes to reverse the trade imbalances that created the debt.
Blaming Bernanke and Geithner would be like blaming the waiter when your bill is too large. They just brought you the items you ordered.
We didn’t get downgraded because of anything Geithner or Bernanke has done. We got downgraded because of congressional approved deficits, bickering in congress preventing them from actions needed to shrink the deficits, and… probably… because someone paid S&P to downgrade us.
Alright…. Which one of my HBB brothers and sisters is doing battle on CityData going by the name Terd Ferguson?
Who ever you are, job well done but you have more work to do.
Stay on’em.