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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Have the Greek and Italian debt crises blown over without causing any long-term problems?
Or not?
After the Greek debt crisis, Europe may be headed for its next nightmare
November 11, 2011 01:16 AM
By Dani Rodrik
The Daily Star
As if the economic ramifications of a full-blown Greek default were not terrifying enough, the political consequences could be far worse. A chaotic eurozone breakup would cause irreparable damage to the European integration project, the central pillar of Europe’s political stability since World War II. It would destabilize not only the highly indebted European periphery, but also core countries such as France and Germany, which have both been the architects of that project.
…
“Keep your friends close and your enemies closer.”
Given European Central Bank intervention in the Italian bond market, then why are MSM writers seemingly so surprised at the large overnight drop in yields? Isn’t this the natural consequence when a bond market fluffer of last resort shoots off its bazooka?
Italian bond yields fall, but French yields soar on S&P ‘error’
November 10, 2011 | 11:05 am
The Eurozone’s debt crisis eased a bit on Thursday as Italian government bond yields pulled back from 14-year highs.
But markets got a new jolt as French bond yields jumped, fueled by an apparently erroneous report that Standard & Poor’s had cut France’s AAA credit rating. S&P said the report was a mistake.
European stocks were mixed. Wall Street was rebounding at midday after diving on Wednesday. The Dow Jones industrial average was up 130 points, or 1.1%, to 11,914 at about 11 a.m. PST, after plunging 389 points on Wednesday.
Italy surprised markets by attracting decent demand at its auction of $6.8 billion of one-year bills, though it paid a hefty price: a yield of 6.09%. Just a month ago, the country was paying 3.57% to borrow for one year.
The U.S. Treasury, by contrast, pays a minuscule 0.08% on one-year debt.
…
“Fluffer of last resort”.
Teehee.
I suppose it beats being fluffer of first resort.
“Italian Bonds Rise on ECB Debt Purchases”
Can central banks buy down bond yields whenever they want, or do a set of conditions exist under which no amount of intervention suffices to reduce yields? (I am thinking perhaps the 1979-1982 U.S. episode may have fallen under the latter case.)
“French Spread Widens”
No comment.
Also, good luck to the members of the unwitting bovine herd as they pick up nickels ahead of steamrollers while the Euro’s exit routes are mapped.
Italian Bonds Rise on ECB Debt Purchases; French Spread Widens
Paul Dobson
Thursday, November 10, 2011
ECB as Last-Resort Lender Will End Crisis: Silva
Italy Yields Drive Record Central Bank Financing
Stocks Rally as Europe Acts on Debt Crisis
Merkel’s Greek Strategy Risks Backfiring as Euro’s Exit Routes Are Mapped
Nov. 10 (Bloomberg) — Italian government bonds rose as the European Central Bank was said to purchase the securities and after the nation sold the maximum amount of one-year bills on offer at an auction.
The advance pushed yields on Italian debt lower after they reached euro-era records yesterday. Italy’s senate is set to vote tomorrow on a package of austerity measures to clear the way for a new government. Yields on five- and 10-year securities stayed near 7 percent amid a clash between Germany and France over Europe’s permanent rescue fund and ECB comments that its intervention in the market is temporary. The French yield premium over German bonds reached a euro-era record as Standard & Poor’s said it erroneously sent a message suggesting the nation’s top credit rating had been lowered.
“The auction results should be interpreted within the context of the extreme pressure that has been brought to bear on Italian debt,” said Luca Jellinek, head of European interest- rate strategy at Credit Agricole Corporate & Investment Bank in London. “Together with reported ECB buying, this auction result should support further Italy outperformance.”
…
“Can central banks buy down bond yields whenever they want”
Yes. The only limit on their ability to do so is political.
“or do a set of conditions exist under which no amount of intervention suffices to reduce yields? (I am thinking perhaps the 1979-1982 U.S. episode may have fallen under the latter case.)”
The only such condition that I can think of is when a country is borrowing in some currency other than the one its central bank can print at will.
I don’t recall being aware of such massive intervention back in 79-82.
“I don’t recall being aware of such massive intervention back in 79-82.”
At that point, with inflation running at double-digit levels, the Fed had to either risk currency collapse or tighten the reins.
We are nowhere near that high an inflation rate now, so they are gearing up to run the printing press on high blast and hope for the best.
Can Asian monies pull back the global economy from the brink of the abyss?
10 November 2011 Last updated at 22:47 ET
Geithner urges Asia-Pacific economies to spur growth
US Treasury Timothy Geithner with Singapore Finance Minister Tharman Shanmugaratnam and others
Asia-Pacific is one of the fastest growing regions in the world
US Treasury Secretary Timothy Geithner has urged Asia-Pacific countries to increase efforts to restore growth to the global economy.
He was addressing finance ministers from the 21 countries that are members of the Asia-Pacific Economic Co-operation (Apec) group.
Mr Geithner also pressed Europe to put in place a “strong plan” to resolve its debt crisis.
The comments come ahead of a summit of Apec leaders in Hawaii.
“We are all directly affected by the crisis in Europe,” said Mr Geithner.
“But the economies gathered here are in a better position than most to take steps to strengthen growth in the face of these pressures from Europe.”
…
US Treasury Secretary Timothy Geithner has urged Asia-Pacific countries to increase efforts to restore growth to the global economy.
If that is code for “buy stuff from us”, he’d better not hold his breath. Those Asia-Pac folks export everything they can and only import what they must.
I think it is really code for holding your currencies artificially low with respect to the US dollar, but it is essentially the same thing.
And, as usual, will have no effect.
code for *stop* holding your currencies…
Where is the herbal tea?
Is the answer “No”?
Any thoughts on which Republican candidate will emerge victorious from the muddle?
Republican candidates: Obama’s biggest plus
Posted on 10 Nov 2011 at 5:55pm
David Webb
The Rare Reporter
One after another, Republican presidential candidates seem determined to self-destruct, which puts the Democratic incumbent ahead of the pack
Anyone wanting to see President Barack Obama serve a second term in the White House for the sake of LGBT equality has got to be feeling pretty good about now as his Republican challengers struggle to survive what must be one of the most peculiar national campaign seasons ever.
When the Republican candidates aren’t self-destructing in mass, they appear to be too busy destroying each other to make any headway with the nation’s voters.
Herman Cain, the black, anti-gay Georgia businessman who has led the pack of Republican contenders for president in recent weeks, likely will soon suffer a steep plunge in opinion polls as a result of several women telling the New York Times and other members of the media he sexually harassed them years ago.
…
It’s not so much the republican candidates as it is the viewer-hungry TV stations who insist on having debates every other week. It’s like a watching a season of Survivor, where one candidate is voted out each week.
I think that it will be a dark horse. In fact, this whole parade of losers might just be a circus to set the scene for the real candidate, who will miraculously emerge at the 11th hour.
I guess I should have read your comment before I posted mine.
Republican Presidential Candidates = Darwin Award nominees, political edition
Miracle candidate like Obama?
As if that’s gonna help…..
It takes no miracle candidate to trump the Republican candidate field.
Palin?
His campaign contributions have actually increased as a result of this, probably because Republicans like to keep a woman down. I find it ironic that he is using the race card to try to give himself the right to oppress women.
I also find it ironic that everyone keeps calling him the Pizza Magnate, when he is really an employee of the Federal Reserve and a puppet for the Koch brothers.
I keep getting this feeling like it’s all just a setup. Is it possible that the Koch brothers really believe that Herman Cain is electable? He is no more electable than Michelle Bachman or Sarah Palin. Amongst other things, (let’s face it), he’s too black. He speaks with a distinctively black accent, he goes out of his way to use blackishly poor grammar, and his demeanor is of the less professional “black” type. Surely the Republican party and the Koch brothers are aware that any black candidate will still need to possess the expected mannerisms of politics (i.e., not really all that black).
I wonder if they are presenting joke after joke of candidates, so as to make us feel relieved when they finally present their true bought-and-paid-for puppet, who will easily win after the fear of Cain has been instilled into every voting Republican in America.
Strategically, if Cain didn’t have the harassment issue, IMHO he stood the best chance of being elected. The electorate generally splits nearly down the middle, Dem or Rep, in the presidential election. Cain could have broken up the black vote, 10% of the electorate. Every percentage point counts. Plus the 1%’s like him because he’s one of them. They don’t need a proxy in government, they can put in an actual CEO.
However… that second point is somewhat secondary. Look at Congress’s personal finances:
http://lewrockwell.com/rep2/to-get-rich-get-elected.html
Here’s joke I read in a different blog.
With some polls showing him neck-and-neck with republican candidates, worried Obama conducts a strategy session with his advisers.
Obama - Boys, what do we do with Romney?
One adviser - Easy Sir. Mormon, Magic underwear. No worries there.
Obama - What about Perry?
Axlerod - Redneck, not bright and racist.
Obama - Sounds good! What about Cain?
Senior Adviser - That’s a hard one. Let’s think about it for a moment.
Obama - I have one. Hear me out. How about we focus on my good half?
“That’s a good one, Sir!”, all advisers shout in unison as they all leave happily for some golf.
“What about Cain.”
“That’s a hard one.”
Given sexual harassment charges, I thought that line was a lead-in to something a lot more raucous than golf.
The Koch brothers believe that their MASSIVE PILE of money can get them anything they want. I picture the Duke brothers talking in the bathroom making a $1 wager that one can’t get a pet rock elected as president.
David Koch managed to get a “we should embrace global warming because adapting to rapid climate change is what made our hominid ancestors smart” into a NOVA program. NOVA. Public television.
I’m not so sure that their money can’t buy them everything.
he’s too black
My black is better than your black, right?
“I wonder if they are presenting joke after joke of candidates, so as to make us feel relieved when they finally present their true bought-and-paid-for puppet, who will easily win after the fear of Cain has been instilled into every voting Republican in America.”
I don’t know, but the comedy sure is entertaining.
http://www.youtube.com/watch?v=vA4CHDgqo7g
This won’t end well…
Veterans for hire
Paul Stewart would not have gone to Iraq if he had not needed the work. But the economy left him little choice.
The Air National Guard sergeant closed his Newton scuba diving shop when the economy crashed in 2008, and after finding nothing but $15-an-hour security guard jobs, he went back on active duty, patrolling a base in 130-degree heat in Baghdad.
He returned in March, but his luck has been no better. “What’s available right now are just low-paying, no-benefit jobs,’’ he said.
http://www.boston.com/business/articles/2011/11/11/iraq_afghanistan_veterans_face_bleak_job_prospects/
BURLINGTON, Vt. (AP) — Police said preliminary investigations show a 35-year-old military veteran fatally shot himself in the head Thursday at an Occupy Wall Street encampment in Vermont’s largest city.
http://news.yahoo.com/protesters-veteran-shoots-self-vt-encampment-222431669.html
He returned in March, but his luck has been no better. “What’s available right now are just low-paying, no-benefit jobs,’’ he said.
As John Mellencamp would say “Ain’t that America”.
So much for the military teaching “marketable job skills”. Unfortunately for returning veterans, cities can only afford so many cops.
Seems like these days, it hardly matters what your skills are. High-skilled jobs are either offshored or filled by H1-B people. Low-skilled jobs are given to illegal immigrants. Either way, American citizens must compete with people who will be taking their cowboy dollars back home to Chindexico.
I heard the vets returning from the Middle East will vastly overwhelm the current VA system. I know of one kid with mild level PTSD that is preventing him from getting a job. I don’t know where they found this out through a simple interview application process, but his mom told me it is still a black mark preventing him from getting work stateside.
I’ve read many of these vets are becoming border patrols or the airport guards that fondle grandmothers. I am sure you’ll see a dramatic spike in homelessness, mental illness, etc. now that we’ve been so hugely successful in our $10 trillion war in Iraq and Afghanistan and these tens of thousands of vets return home.
I heard the vets returning from the Middle East will vastly overwhelm the current VA system.
Let’s see that would make it:
Cheney-$hrub $hadow Legacy Effect # 19
Bicycle advice needed… the shop where I took my old-school 10 speed roadie has recommended the Giant Defy (http://www.giant-bicycles.com/en-us/bikes/model/defy.1/7307/44047/)as a starter bike for more serious riding. This retails for $1370, and that’s the absolute most I want to spend on new wheels. And yes I do want to buy new, not about to buy something like this off craigslist in unknown condition, and would like the repair and maintenance offered by the shop for new bikes.
Has anyone owned/rode on this? Would you recommend this bike, or a comparable alternative? This will be rode both on flat front range roads as well as on mountain roads up to 12,000′ elevation.
One of my favorite bike shops carries Giant but I have a 15 year old Giant Butte (hybrid) that was barely ridden and I am NOT at all impressed at how it’s falling apart. I took it to my shop to fix up and I swear the problems are even worse. I’m way more impressed w/my Trek which has been a dream.
I’ve riden with the Ultegra components (the Shimano 105 5700 is its next generation, I believe) and I’ve been totally happy with them on my KHS.
I’m currently riding a 25-year-old Cannondale mountain bike with street tires. This bike is absolutely bulletproof, and yes, I can still get parts for it.
I’m also in the process of getting my 1986 Cannondale racing bike back on the streets.
As for my Bike Friday folder, I’d like to sell it. Reason: I can’t haul as much weight in the panniers as I’d like. The rack’s too wobbly. So, look out Craigslist, here I come.
The word from Slim: Get vintage Cannondales from the 1980s and 1990s. Darn things last forever. And, as for folders, pay careful attention to the rack strength. When you’re on tour, that matters.
Cannondale = Porsche of bikes
In performance. And price.
I would like to submit my entry for HBB poetry contest:
Comment by Big V
2011-11-10 09:38:01
Z Originale Housing Bubble Blog Poem (from Feb ‘09)
I’m sensing a lot of pent up se*ual tension there, Big V…
Here’s my nominee:
Images……by Tyrone Green
Dark and lonely on a summer’s night
Kill my landlord, Kill my landlord.
Watchdog barking; do he bite?
Kill my landlord, Kill my landlord
Slip in his window, break his neck
Then his house, I start to wreck.
Got no reason…..what the heck?
Kill my landlord. kill my landlord
C….I….L….L…..my land lord.
Are you going to vote for my poem, then?
Got my vote!
I am gonna have to go with…
“Kill my landlord. kill my landlord”
Eddie Murphy was WAAAY ahead of his time on that one.
Weekend topic suggestion: HBB Poetry Slam! Did someone mention this on another thread?
Let’s do it!
Hey man! Somebody stole your radio. I say we go get the mother%^*er!
When will the Western economies grow again?
and can they will near zero population growth?
http://www.forbes.com/sites/china/2011/11/11/will-china-eat-our-renewable-lunch/?partner=yahoofeed
The last couple of paragraphs almost make one laugh
Given these trends, and other macro-economic conditions, the choices for American companies are stark. With declining markets in the U.S. and Europe, China and the rest of Asia will inevitably play a larger role in corporate and government investment choices. Will new corporate structures follow GM’s strategy, where the headquarters are located in the U. S., but the majority of its profits come out of China? Or will truly global companies straddle American and Asian borders? And how can these models bring prosperity to the U.S.?
In order to meet the challenges of this transition period, we must focus on our own comparative advantages. A culture of creativity and innovation, an extremely vibrant cluster of educational institutions, a rich cultural life and supportive government provide a strong ecosystem for attracting and retaining talent and investment. All in all, we’d still rather live in Boston than Beijing, and we want what’s left of our money to stay here.
Culture of creativity and innovation - Who cares if you innovate if the Chinese can just steal your technology.
Vibrant cluster of educational institutions - Who cares if your the majority can’t justify spending the money because the jobs at the other end don’t pay well enough.
Supportive gov providing a strong ecosystem for Attracting adn retaining talent. Again this is when we had a strong middle class with the collapse of hte middle class and infrastructure you can expect this talent to stay home or move home.
we’d still rather live in Boston than Beijing, and we want what’s left of our money to stay here. That’s just fluff. Why would we want to keep our money here when WS has taken to theft to fund fat bonuses, and off loads it’s losses onto the American Tax payer.
The only way for us to preserve our comparative advantages is to stop allowing US corporations to offshore their labor without paying a penalty to compensate our economy.
How is that hard to understand? How?
Half as many people applied to enter a diversity lottery to receive an American green card this year than last.
Poof goes another advantage of the USA. Foreigners used to view the US as the land of opportunity. Hard work and an education were rewarded. Now they see the middle class getting crushed by the elite, just like at home. No reason to pick up and move from one 3rd world country to another.
This Floyd Norris piece is terrifying
Distortions In Baffling Financial Statements
http://www.nytimes.com/2011/11/11/business/accounting-for-financial-institutions-is-a-mess.html?ref=business&src=me&pagewanted=all
A few snippets:
This year’s strange financial reports are being caused, in large part, by an accounting rule that has the counterintuitive result of increasing reported profits — and revenues — just because people are losing faith in the ability of the bank to meet its obligations. I’ll get into the details later….
Perhaps the most perverse effect seen this year, however, came at Goldman Sachs, which has not had good numbers to report. In the name of preventing unreasonable swings in earnings figures, it has essentially placed bets that its rivals’ credit standing will not deteriorate. The result would be to make Goldman more vulnerable if there were another financial crisis because it would have to pay out substantial sums if other firms collapsed.
Goldman describes its actions as hedging, but the use of that term seems misleading. What is being hedged is a somewhat meaningless accounting entry, one that in no way reflects actual cash flows and that is likely to reverse on its own a quarter or two later. But the “hedge” involves real money. Goldman will make money if investors grow more sanguine about the prospects of its competitors. But it will lose money if investors get more worried — and it could lose a lot if one or more large firms default….
I’m still scratching my head over this one. I’ll be reading it again.
They are doubling down on too big to fail. Probably a smart bet given that WS controls our gov.
That was my interpretation, but I really didn’t want to believe it.
Damn.
Almost like they are daring the government to let them or their bankster buddies fail.
Where’s Teddy Roosevelt when you need him……
Yeah, I read this as, “give me your money or I’ll shoot myself!”
How awesome would it be to see Goldman poof!