Bits Bucket for November 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
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“The insurmountable hurdle for so-called populist movements is having the nerve to attack the rich instead of the poor. Even after the rich destroyed the entire global economy through their sheer unrestrained greed and stupidity, we can’t shake the peasant mentality that says we should go easy on them, because the best hope for our collective prosperity is in them creating wealth for us all.
The new America, instead, is becoming a vast ghetto in which all of us, conservatives and progressives, are being bled dry by a relatively tiny oligarchy of extremely clever financial criminals and their castrato henchmen in government, whose main job is to be good actors on TV and put on a good show.” Matt Taibbi - Griftopia
“The shocking truth about the crackdown on Occupy
The violent police assaults across the US are no coincidence. Occupy has touched the third rail of our political class’s venality”
http://www.guardian.co.uk/commentisfree/cifamerica/2011/nov/25/shocking-truth-about-crackdown-occupy?fb=optOut
When I saw this list – and especially the last agenda item – the scales fell from my eyes. Of course, these unarmed people would be having the shit kicked out of them.
At least people on the other side of the pond get it, which is why I think they will eventually revolt against their Goldman appointed overlords. We Americans, on the othe rhand, will welcome Fascism with open arms while we sing about “the land of the free” at our corporate run sporting events.
Well said, Colorado.
This is all making me think of the Bonus Army march of the 1930s. They didn’t know who to blame for the mess, but it was easy to go off on bankers and industrialists. But at least they marched on DC, whereas OWS doesn’t seem to acknowledge how complicit the government was in all this. Even without the bribery, plenty of bien pensants in the governing class thought the bubble and FIRE economy was good for everybody and just let it run.
Didn’t Patton charge the Bonus marchers with Calvary and kill a bunch of them?
“Reporters were asked by NYPD to raise their hands to prove they had credentials: when many dutifully did so, they were taken, upon threat of arrest, away from the story they were covering, and penned far from the site in which the news was unfolding. Other reporters wearing press passes were arrested and roughed up by cops,”
I actually still have faith in our media, not that they’ll necessarily tell the truth, but that they won’t put up with that crap and will come back to do the story. If they want one, the police are writing them a good one.
“The Shocking Truth About the Crackdown on Occupy”
That reads like a Natl. Enquirer headline. Not good.
‘the rich destroyed the entire global economy ‘
‘America is becoming a vast ghetto’
I don’t know that it helps to overstate things.
It helps to lower prices of such things such as stocks. It helps the buyers of such things as stocks.
Overstating such things is what Bear Markets are made of.
Overstating things = the buyer’s best friend.
Overstating things = the
buyer’s1%’ers best friend.Fixed it for ya.
“1%’ers best friend.”
That’s part of the reason they’re 1%’ers.
It’s not just about income; Buffett, for example, doesn’t have all that much income - he never had all that much income - but he’s near the top of the list of the one -percenters.
So, ask yourself, how did Buffett get to be a one-percenter?
If it was all about income then guys like M C Hammer would be one-percenters instead of broke.
So, ask yourself, how did Buffett get to be a one-percenter?
I agree, but that was my point.
“Overstating things” helps those with all the wealth become even wealthier. When assets prices fall during a crash the little people don’t have any wealth to shift into those bargain priced assets (which few of them even understand), only the 1%ers do.
As to how Buffet got his start towards wealth, he was a stockbroker for several years and made a lot of money which he then used to start what eventually became Berkshire.
He was an execeptional individual and was able to claw his way into 1%erdom. Those that do tend to be well known as they are few and far between. If you are a 1%er you are far more likely to be born into that status.
One thing I have noticed about east coast vs. flyover folks is that the east coasters tend to be much more class conscious. I recall one gal from the useless MBA program I was in. She was a DVM (Doctor of Veterinary Medicine) student (who was enrolled in a dual DVM/MBA program) and was from the east coast. She was in culture shock over how laid back we are out here about being “successful” and she couldn’t believe the lack of class awareness. I have also noticed that everywhere I have worked in Colorado my east (and to a lesser degree west) coast colleagues are the ones most likely to drive very expensive cars (almost always leased).
“I agree, but that was my point.”
My point (part of it at least) is that income and wealth are not the same thing, but the people howling about the one-percenters treat it as if they are the same thing.
One percenters are people with wealth of over 14 million dollars; This is what makes a person a one-percenter. (At least 14 million is what I understand the figure to be.) This does not mean that they earn 14 million dollars - they may in fact not earn any income from this 14 million dollars of wealth because, for example, the return on interest bearing deposits are near zero.
If a movement wants to address an issue - in this case income - then they should not obscure the definition of the core to their issue such as what factors make up a one-percenter.
My point (part of it at least) is that income and wealth are not the same thing, but the people howling about the one-percenters treat it as if they are the same thing.
I agree, but also realize that in many cases the wealthy become wealthier because income is taken away from the little people.
For example:
Companies keep wage increases below real inflation, hurting their employees. That savings go to the company’s bottom line, which boosts profits, which in turn boosts stock prices.
Also, some 1%’ers did get there via income. As you yourself mentioned the other day, the managerial class awards itself handsome wages and bonuses. Mark Hurd was
paid about $50,000,000 a year before HP fired him. He also had a large 6 figure personal expense account which he could use to take his family on vacations, using the corporate jet (I guess flying first class was too pedestrian for him). He now earns 78 million at Oracle, and he’s not even the head honcho!
“I agree, but also realize that in many cases the wealthy become wealthier because income is take from the little people.”
Then, what? these are the bad guys?
If these are the bad guys then go after them for being the bad guys; Don’t go after them just because they are wealthy.
If one wants a list of the bad guys then one might want to take a look at the roster of those who are the officers and directors of the corporations that are doing all the things that are so disturbing and spend energy going after them instead of spending energy confronting authority figures who have lots of guns.
If one wants a list of the bad guys then one might want to take a look at the roster of those who are the officers and directors of the corporations that are doing all the things that are so disturbing and spend energy going after them
Aren’t those guys 1%er’s? And aren’t they doing this stuff at the behest of the idle 1%’ers?
instead of spending energy confronting authority figures who have lots of guns.
These guys work for the “bad guys”. If you confront the “bad guys” (Coprorate America) you will be labelled a terrorist and imprisoned without due process, and maybe even disappear a la Soviet Union. I think that we aren’t all that far from the dreaded “knock on the door at night” which comes with a free ticket to a camp in Alaska. Welcome to the Fascist States of America (or Corporate Communist Capitalsim as some here like to call it). If you can, get a foreign passport, it might be the only way to get out when things really get ugly. You will, of course, have to leave your money behind when you leave.
Maybe I should stop posting this kind of stuff.
Again, do not spend energy going after Corporate America (as you term it), spend your energy going after the guys who are running Corporate America.
Corporations are run by people. If the corporations are screwing folks then go after the power people who are behind the screwing.
People are what’s behind the screwing, the corporation is merely the tool that is used to implement the screwing.
Maybe I should stop posting this kind of stuff.
Just for you: http://en.wikipedia.org/wiki/Rex_84
There has never been a better time to be a 1%er.
“If a movement wants to address an issue - in this case income - then they should not obscure the definition of the core to their issue such as what factors make up a one-percenter.”
I think most of the OWS people are aware of the difference between income and wealth. What makes you think otherwise? Give us a link to where they are ‘obscuring the definition’.
” If the corporations are screwing folks then go after the power people who are behind the screwing.”
I believe that is precisely what the OWS protesters were doing when they marched to the apartments of the elite insider megarich in Manhattan.
“instead of spending energy confronting authority figures who have lots of guns.”
The authority figures with the guns are there to keep the OWS people from confronting the 1%ers.
—
Nice batch of nonsensical straw men, combo.
Bombast gets attention and is even a little fun. But when it comes to changing peoples minds, the public is numb to it now. Plus when held up to scrutiny, it makes the speaker look silly.
Let’s ask, what does a destroyed economy look like? Does it resemble what we have now? It’s probably more accurate to say the global economy is suffering with large imbalances. These imbalances have created distortions in debt, jobs, capital and resource flows. And it’s gone on for such a long time that the distortions are pervasive. But the economy can reestablish equilibrium. The question is how to move toward this?
‘we can’t shake the peasant mentality’
Curley once said, ‘we’re trapped, like rats.’ And Moe replied, ’speak for yourself, rodent.’
Along these lines I was talking with someone about Walmart. This person said we should change laws that let Walmart become so dominant. I mentioned that what Walmart did was largely legal. Yes, selling Chinese junk and helping to send jobs overseas could be addressed by tariffs, but why don’t we just stop shopping there?
It’s the same with most problems. Money corrupting politicians, for example. Newt Gingrich was recently exposed taking a large amount of money from Freddie Mac for doing nothing. This is how bribery is done in this system. But instead of being shamed off the campaign trail, he is able to brush it off. Why do we tolerate this as voters? Because everyone does it?
A corrupt system isn’t going to reform itself. And the public has the power to make those reforms. Directly addressing the corrupt aspects of the system are a start. But if overstate the problems, and it then doesn’t match up with reality, you’ve lost the public’s attention.
Let’s ask, what does a destroyed economy look like?
It depends on where you are seeing it from.
If you are a Lucky Ducky, it probably looks like a poverty ridden future, one where you might be able to remember a full time, $20/hr job with benefits, as opposed to the 3 minumum wage, no benefits P/t jobs you have now and are suplementing with SNAP so you can feed your family. For them the nuke has already detonated.
If you are a member of the managerial class in Corporate America, everything is looking fine while the firm announces record profits and you take delivery of your new BMW. What nuke?
If you are an individual contributor, you notice how your coworkers are quietly laid off one by one (to avoid headlines of mass layoffs); their jobs shipped overseas while you try to get by on yet another year without a pay increase. For them armageddon is visible as they are underwater in their houses, their 401Ks have tanked, their kids college is more expensive than ever, while grocery bills and healthcare costs skyrocket. It might seem like “imbalance” to them, that is until the boss calls them into the office with the bad news and maybe a few weeks of severance pay. The fortunate ones find a new job in their field (after wiping out their savings), the unfortunate ones join the ranks of the Lucky Duckies.
” And the public has the power to make those reforms. Directly addressing the corrupt aspects of the system are a start.”
compare & contra$t work $heet:
Rick Perry (R)
Olympia Snowe (R)
Peon-citizen $entinel
MegaCorpInc. $entinel
Who’s being offered up as “We’s gonna-b-the-Decider’s!” voters choice?
I am seeing another side of America. The government “employee” side. Recently, I have encountered not less than 4 people in my loose circle of associates, friends and chance-meetings who are “recently retired”, who are all in my age group- mid fifties. They all said the same thing: “I got in my 30.”
When I was in my 40’s I noticed the world was changing. Government benefits were increasing and real world jobs were going the 401k route. I did try to get a few County and state jobs, but white men were not in demand. They wanted “diversity”. By the time I hit 50, it was not probable.
I lost my regular job two years ago, after 8.5 years at that company. My 401k has gone nowhere, and I am mostly in cash due to volatile nature of the market. So, I see THREE or 4 groups of Americans. Those like me, who have worked their “40″ and still don’t have enough savings to retire due to the ZERO market growth of the past 10 years. 2) Government “employees” who got Gold-plated retirement accounts based on “projected” growth of the markets in the 1990’s (without downward revisions). 3) People with solid companies that still have pensions, including the Corporate elites and CEO’s.
and 4). the “Entitled” government parasites who collect “benefits” from the working class.
Depending on which group you fall into, the American economy is a very different place.
and 4). the “Entitled” government parasites who collect “benefits” from the working class.
FWIW, unless you are cheating (hiding income) being a member of #4 isn’t all that great. They don’t all have section 8 housing, and many who do live in hoods we would flee from (they don’t all live in Poway or Rancho Bernardo).
I know more thana few of these “parasites”. Many of them used to have jobs that paid a living wage and were part of the middle class. Then that ended and they are now struggling with part time jobs and SNAP to get by. They aren’t living large and my wife often passes hand me downs to those people.
I also learned that in our school district new hires don’t get a pension. Being that our state pension system (PERA) should be insolvent in about 10 years (barring some Wall St miracle) they might be better off with their 403(b)’s. They won’t be able to retire on them, but at least they’ll have something. There’s no way the state will bail out PERA, TABOR won’t allow the tax increases needed to save it.
‘you might be able to remember a full time, $20/hr job with benefits, as opposed to the 3 minimum wage, no benefits P/t jobs you have now and are supplementing with SNAP so you can feed your family’
I’ve mentioned before that the most dramatic mental aspect of the Texas bubble was how far the standard of living went down. We could remember the fancy cars, plentiful high paying jobs, the enthusiasm. Then we saw adults with families taking paper routes.
IMO, the more recent bubbles masked the economic weaknesses that were there all along. Real wages in the US have been falling for decades. We were told that the new middle classes these off-shored industries would create consumers for our markets. I’ll let you judge if that’s worked out.
But we have something else to fix; bubbles distort the jobs market. We’ve got too many people in the stock and construction fields (an imbalance), and the consumer patterns built around that. Recessions are how these people are forced to make changes.
This is outside of the questions of corruption and inequality. You could take every dime from wall street and it won’t make the residential construction guy’s job sustainable.
Real wage$ in the US have been falling for decades
Real wage$ in the US have been falling for decades
Real wage$ in the US have been falling for decades
Diogenes, I started working as a federal employee in the 1980s just after the CSRA was replaced by the Thrift Savings Plan. My pay system was not even under the GS system but “Demonstration Project.” I started working late. If I got out of college at the usual four years, I would have been in the CSRA and would today be crowing about “I got my 30.” My best friend is about ready for retirement (ex Army and civil service).
All along I was warned by my contemporaries about outsourcing to India. I kept working, and glanced nervously at cut-out newspaper clippings of CMM level 5 organizations in India doing software for US-based corporations, yet I kept employed.
I had the discretionary income to save and invest in stock mutual funds since I had no family to feed. Meanwhile my friends who had young families gave up on investing, even regular workouts at the MWR (on the navy base) to focus on caring for their families.
For both of us types (the single never marrieds who could save, and the married ones who could not save nor stay in physical health) we realized we could not keep up with the expectations of what it means to be middle class and something had to be given up. The expectations were admittedly excessive over what middle class meant in 1971. Instead of a one car family, a multi-car family. Instead of a one TV family, several flat screen TVs, cable TV, smart phones, ocean cruises for the older teens, European vacation for the family, and so on.
And yes, many of us were fooled by the dot com bubble and the real estate bubble into throwing our money at it in hopes of finally beating the middle class squeeze.
The workers are taking home less money( GDP is $14.58 Trillion so its almost $200 billion less for workers just since 2009!):
Wage and salary income was only 43.7 percent of G.D.P., the lowest number for any period going back to 1929. That figure first fell below 45 percent in 2009.
http://www.nytimes.com/2011/11/26/business/for-companies-the-good-old-days-are-now.html?src=me&ref=business
With the artificially-low interest rate environment we currently disdain and endure, shouldn’t the trend likely reverse?
It helps bring to light the folly of living in an owner-occupied, overpriced money trap.
‘America is becoming a vast ghetto’
I don`t think so, it`s just that the only place you can find an affordable place to live is in the ghetto.
‘America is becoming a vast ghetto’
I don`t think so
Actually, I have acquaintances from across the pond who say that the the USA’s transformation into a ghetto is rather noticeable to someone who only visits occasionally. One is an American expat who lives in Europe and who is very disturbed by what he sees happening here.
Agree, Colorado.
My expat friends are uniformly horrified at what’s become of this country’s infrastructure– our roads and airports being a particular embarrassment.
One has even all-but-abandoned his fabled villa on the cliffs of Maui because his neighborhood has, in his words, “turned into a third-world country full of beggars and homeless people.” He no longer feels safe there, so has relocated his more valuable furnishings and artworks to his home in Indonesia!
People cannot believe what’s happening over here these days, and I can’t imagine that the OWS movement is bringing them any great peace of mind….
The only things keeping America from looking like a ghetto is FDR and LBJ programs, currently funded by China. Take away food stamps and social security, and we’d have bread lines as far as the eye can see. Want some real fun visuals for the evening news? Take away Medicare. The rich think that “charities” can take care of the poor, but where is all this charity money going to come from? The poor’s got no money,the middle class is tapped, and the rich “worked hard” and “got a job.” Maybe a few rich will give out of guilt, but by not giving enough for everybody, they will effectively pick and choose who is fed and housed. Maybe that’s what they want. (whites only, fundies only, etc.).
Maybe a few rich will give out of guilt, but by not giving enough for everybody, they will effectively pick and choose who is fed and housed. Maybe that’s what they want. (whites only, fundies only, etc.).
I have wondered that myself.
As for “churches” picking up the slack, don’t hold your breath. While fundy pastors expect their flocks to tithe, almost all the money is spent on:
1) The church’s facilities
2) Staff salaries
3) whatever is left is spent on missionary work.
Our local poor know that it’s pointless to ask the fundies for help. After telling them to “get a job” the fundies tell them “go to St. John’s, they might help you pay for your medicine/rent/heat/power/gas/etc”.
‘a few rich will … pick and choose who is fed and housed’
Seems rather extreme. Not the future I’d expect. Things usually do not exprapolate to infinity. These “rich” that are so hated, they will lose a lot of their wealth and control as the once reliable streams dry up or change course.
Wrong. The rescue mission and the local charities do wonders for the people who need help. We have
a homeless shelter for families, single men, and single women, all built with local donations. The three homes can house over a 130 people and are actually small studio apartments with a communal kitchen. All of this was built with donations and church help
We have the rescue mission that feeds almost
50-60 men three times a day and tries to get them
work, even temp work. Same with Vinny dePaul,
they serve meals to the homeless every day.
We have a food bank which helps feed hundreds of families every month. We have donated farm land that provided thousands of pounds of veggies and fruit labor provided by the people being helped.
We have a 5,000 sq ft garden, and what we don’t
can, freeze, or dry, goes to the mission. The people
in this town take care of their own and the many
Christian church’s lead the way in doing so. They
walk the talk.
Our local poor know that it’s pointless to ask the fundies for help. After telling them to “get a job” the fundies tell them “go to St. John’s, they might help you pay for your medicine/rent/heat/power/gas/etc”.
Because fundies and evans aren’t Christian. How else do you expect them to respond to the lower classes?
The Mormon church fed my aunt and uncle for about 6 months last year.
Interesting Skroodle. And it’s the fundie and evans who accuse the mormon’s of being non-Christian yet the mormons did what they were called to do.
Up is down.
War is peace.
Spending is saving.
Christian works is turning away the poor.
Darkness is light.
Lying is truth.
Evil is good.
We are a nation of zombies.
“…yet the mormons did what they were called to do.”
So far as I can tell, one big difference between fundies & evans versus Mormons is that Mormons actually do their best to live the stated principles of their Gospel, especially when it comes to serving others. I suppose this distinction is why they don’t seem like Christians to the fundies & evans.
“We have
a homeless shelter for families, single men, and single women, all built with local donations.
We have the rescue mission that feeds almost
50-60 men three times a day and tries to get them
work, even temp work”
I didn’t
see any mention of
health care coverage in there.
Where do they
get that?
hmm?
I lost my regular job two years ago, after 8.5 years at that company. My 401k has gone nowhere, and I am mostly in cash due to volatile nature of the market. So, I see THREE or 4 groups of Americans. Those like me, who have worked their “40″ and still don’t have enough savings to retire due to the ZERO market growth of the past 10 years. 2) Government “employees” who got Gold-plated retirement accounts based on “projected” growth of the markets in the 1990’s (without downward revisions). 3) People with solid companies that still have pensions, including the Corporate elites and CEO’s.
and 4). the “Entitled” government parasites who collect “benefits” from the working class.
Depending on which group you fall into, the American economy is a very different place.”
If people like you and me (number 1) keep losing out how long do you think people ( number 2) will have gold plated retirements ?
probably longer than number 4 government cheese people and probably longer than any of us would imagine
number 3 is very small, pensions are going away. High ranking mangement gets stock options often over 100,000 shares a year which they have to work hard at convincing someone else to buy from them. They do this by increasing profits by outsourcing labor. even if it’s temporary who cares managment does not they will simply buy another start-up and then in turn run it into the ground ( which always happens even these too big to fail banks will fail).
The standard of living in America is so high compared to other countries only creative start-ups or protected government work can maintain this middle class standard of living. Work for a big corporation be prepared to lose your job, and when you get older good luck getting hired at a cost conscious big corporation thats getting the life sucked out of it by short term bad managment.
Rancher, I’m not desparaging the rescue mission. I’m just wonder what would happen if the government suddenly stopped the food stamp or medicaid or even unemployment programs. I don’t think the rescue mission could handle the new influx of poverty. Food banks are already strapped.
As for the Mormons, do they help anyone other than other Mormons? I honestly don’t know.
“…do they help anyone other than other Mormons? I honestly don’t know.”
LDS Church welfare program’s 75th anniversary a cause for inspiration, celebration (OPINION)
Written by Sen. Orrin Hatch on November 18, 2011 in Opinion
…Church Humanitarian Services was formed in 1985 to expand the welfare program around the world. Wherever there is a need, the church through its welfare program is prepared and ready to respond.
For example, the LDS Church donated $13 million in cash and 3,000 tons of emergency supplies in 2005 when Hurricane Katrina hit the Gulf Coast. And thousands of Latter-day Saints provided more than 42,000 days of service to victims, regardless of their religious views or affiliation. Similar relief efforts have been initiated in response to disasters in many other parts of the world.
…
Or out of California - documented net outmigration. Hooray!!
Yesterday passing by the “Occupy Yucca Valley,CA” citizen-peon$ :
“Feed the poor,
Eat the rich!”
We drove through Yucca Valley, CA two days ago. There are enough Joshua Trees out there to provide one for each FB in America.
In the Ghetto - Elvis Presley
As the snow flies
On a cold and gray Chicago mornin’
Another bogus sub prime loan is born
In the ghetto
And the renter cries
’cause if there’s one thing that he can see
it’s another victim who`ll be livin free
In the ghetto
People, don’t you understand
the victim needs a helping hand
or he’ll grow to be an angry Deadbeat some day
Take a look at you and me,
are we too blind to see,
do we simply turn our heads away
and let the Deadbeat never pay
Well the world turns
and the new homeowner with the brand new clothes
Refis three times and the money he blows
In the ghetto
Now his anger burns
so he starts to search his loan at night
this was Robo signed
Now that just aint` right
In the ghetto
Then one day in desperation
the young man doesn`t pay
He`s got his house, got his car,
Spends his time at the local bar
And the renter cries
As a crowd gathers ’round an angry old man
face down on the street with a lease in his hand
In the Suburbs
As the renter dies,
on a cold and gray Chicago mornin’,
another Homeloaner bailouts born
In the ghetto
I’ll pull out my guitar and try it to music in a little while. I think this may become a hit tune. The musical background fits the mood of the lyrics you have chosen. I’ll post to Nashville. You may have found a great tune, subject to some copyright and plagurism claims. It’s a real tear-jerker. Find me some Kleenex.
“it’s another victim who`ll be livin free
In the ghetto”
“Build it and they will come…” Field of Dreams, by Sir Greenis$pent & Ayn Rand
Bravo Jeff!
I needed the laugh today.
I just read that for the first time since I posted it and I have to admit, that is funny.
And I’m sorry to whoever it offended. Wait a second, no I`m not.
Hah, you should look up the lyrics to Too $hort - Money in the Ghetto. These are legitimate lyrics:
[Verse One]
In the ghetto, you think life is hard
Food stamps and to’ up cars
Wall to wall dirty orange carpet
Sittin in a bucket, hopin you can start it
And ride around to the liquor store
Can’t get a job get drunk some more
You betta stop trippin on dem stereotypes
Cause in the ghetto there’s a good life
We ain’t starvin like Marvin, won’t see no roach
when ya chill wit the rich folks in the hood
You’re sittin on leather watchin big screens
bought by the dope fiends
Smokin, and what about the brother wit the good jobs
Savin money, and workin hard
Bought a house for his wife and kids
Ya only got one life to live
Another brother got some cocaine
You know his face, but don’t know his name
You know he got the sack mayn
And he’s sittin on a fat bank
Seven cars at his house in the driveway
Benz so clean don’t roll it just fly away
Cause folks got money in the ghetto.. yeah you know
[Chorus One]
Hey hey hey.. whatcha got to say (There’s money in the ghetto)
Hollywoooooood! Havin money in the ghettooo
http://www.trulia.com/property/3057290732-Single-Family-Home-Sunnyside-NY-11104
Still holding out for the right buyer…
Has the photo gallery been updated or moved ??
I had to stop updating the gallery years ago because I couldn’t keep up with all the spam. It was partly a result of a bad choice in format, but mostly because it took too long to go through all the bogus emails.
Black Friday sales up 7 pct; retailers look ahead
By DEE-ANN DURBIN The Associated Press
Updated: 11:32 p.m. Saturday, Nov. 26, 2011
Posted: 5:06 p.m. Saturday, Nov. 26, 2011
The holiday shopping season got off to a strong start on Black Friday, with retail sales up 7 percent over last year, according to the most recent survey. Now stores just have to keep buyers coming back without the promise of door-buster savings.
Buyers spent $11.4 billion at retail stores and malls, up nearly $1 billion from last year, according to a Saturday report from ShopperTrak. It was the largest amount ever spent on the day that marks the beginning of the holiday shopping season, and the biggest year-over-year increase since 2007. Chicago-based ShopperTrak gathers data from 25,000 outlets across the U.S., including individual stores and shopping centers.
Whoa…..they calculated that real fast…..
Just wait for a downward revision.
There won’t be a revision until after the Christmas bonuses are calculated for the Wallstreet brokers and bankers. We need “good numbers” going into the end of the year, so they can justify multi-million dollar bonuses for shuffling papers from one account to another, thus having “created” wealth.
As an aside, I find it telling that we have a huge shopping spree for bargains. I suspect most of the buying was done on credit, with the exception of those millions of “homeowners” who aren’t making any mortgage payments. They are the only ones with real disposable income since they don’t have any housing expense, including taxes and insurance. My house is free and clear, but I still get to pay for upkeep, taxes and insurance. If I didn’t, I could go out and spend a few thousand dollars and have not impacted my net spending a single dime.
So, I ask, where is all the record “income” being generated, based on earnings and wages? I don’t see it in the economic data. All I see is a bunch of deadbeats milking the banking system and hoping they can stay in their “rent-free” house for another year or two.
In the meantime, to compensate for their stupid loans and deadbeat customers, every bank in the country is trying to find as many fees and charges they can muster to boost their balance sheets (even after the fraudulent accounting that the Fed’s allowed).
Will Christmas “spending” save us from too much indebtedness?
What kind of fantasy world are we living in? How did we learn to spend our way to prosperity? I see another leg down in the markets and more pain and suffering for working people. Maybe the toys will make them feel better for a little while.
All hail GoldmanSachs!!
‘How did we learn to spend our way to prosperity?’
It was sold to us as a sustainable economic policy by our politicians. They did this right out in the open.
After 9/11 Bush told us to go to Disneyworld and not worry.
Two places that have a ‘Fantasyland’: DC and the Magic Kingdom (ok, it’s 3, since there are two Magic Kingdoms in the USA). AT least Disney is upfront that it’s about fantasy.
…or are the people who buy these days less extended in their debt than they were last year or the year before? This is approaching the fifth December since the start of the GR. By now everyone except for those who just came out of a five year coma, has had time to reduce their debt, walk away from their houses in a non recourse state, and build up some reserves to buy what? Junk.
HBB posts in November 2016 following Thanksgiving will be puzzled (disappointed?) about the resiliency of the American worker. S & P 500 index average annual return will be greater than 5% since 2000. Market cycles.
Did I stress “Market Cycles?” No. Market Cycles
“HBB posts in November 2016 following Thanksgiving will be puzzled (disappointed?) about the resiliency of the American worker.”
And I’m picturing links to articles with titles such as,
“Housing Market not Forecast to rebound until mid-2017″
Here ya go — no mention of 2017, though…
Housing market still in recovery
Massachusetts’ housing downturn persists, despite attempts to reverse it
November 20, 2011|By Jenifer B. McKim, Globe Staff
More than six years after the housing downturn began in Massachusetts, home sales are still painfully slow. Values remain 15 percent below their peak. Foreclosures, which slowed as banks wrestled with legal problems, appear to be accelerating again.
As another fall selling season nears its end, the housing market continues to defy efforts to revive it and confound analysts who expected a rebound to be long underway by now. Despite record low interest rates, multibillion-dollar mortgage modification programs, and a host of other efforts, few housing specialists expect any notable improvement in the housing market anytime soon.
Single-family home sales in Massachusetts are unlikely to top 40,000 this year, which would be the lowest number since 1991, when the epic real estate crash of the late 1980s neared its bottom. Even with that crash, a sustained recovery began after four years, and was well underway by year six.
“The housing market is almost as bad as it has ever been absent the Great Recession,’’ said Nicolas Retsinas, a real estate lecturer at Harvard Business School. “We have a situation where the tried and true methods don’t hold water.’’
…
Now stores just have to keep buyers coming back without the promise of door-buster savings.
The fact that the stores were opening earlier than ever to compete for those bargain hunters kind of indicates what they think will happen during the rest of the “Holiday Season”. In other words, lackluster sales. How could it be any other way?
But go ahead Corporate America, keep on decimating the employment base and then wonder why “consumers” aren’t shopping.
My wife and I did a lot of Black Friday shopping, but a lot of it was semi-necessities (bow saw, axe, enzyme drain opener, Gladware, etc.) whose purchase that day was motivated by various promotions at different hardware stores. The other part of it was some stuff that was heavily on sale at Harbor Freight that I wanted to get myself (a low-end arc welder) and my father (an inspection camera and an infrared thermometer).
I suspect this is people putting off purchases. My BIL went 6 months without a TV because he thought, rightly so, that TV prices would fall.
Bought a great top-of-the line Sony 55″ LCD flat screen two-month-old demo for under $1k including tax and a five-year in-home warranty.
Not LED, not plasma. Not 3D and no internet apps. Less to go south.
Happy campers, we.
Waited forever to pounce; so glad we finally did. -
“Waited forever to pounce;…”
Did you need to use pepper spray?
Black Friday! Now starting on Thursday!! Of course the numbers are up, a lot of places opened earlier than ever. Of course the whole tale won’t be told until the entire shopping season is tallied.
Hollywood Christmas Parade tonight, November 27th.
Realtors Are Liars®
Per-prisoner cost doubled in 10 years:
November 27th, 2011, by Teri Sforza, OC Register staff writer
The average cost to incarcerate a prisoner in California has more than doubled over the past 10 years, according to the Legislative Analyst’s Office.
“The primary reasons are significant increases in employee compensation as well as federal court orders and settlements that have required specific program improvements (such as inmate medical care),” the LAO said.
In 2010, the average cost to incarcerate an inmate in state prison was $46,700. About three–quarters of that was spent on security and inmate health care. (See a chart of how that money is divvied up below.)
As a point of reference, a year at Harvard costs around $50,000 these days.
It’s a good thing that inflation is under control. Of course, it only takes 7% inflation to double prices in 10 years.
It only hurts when there no cost of living wage increases for the masses (then they wonder why we aren’t shopping like we used to).
Perp age: 42
3rd $trike-4-life charges: unauthorized removal X1 $9.99 pizza + 12pk Milwaukee’s best + (threw beer cans at pursing military-weaponized-cops)
n = (longevity) x$46,700+
Total co$t: TBD
Nice.
I wish they show the cost to incarcerate for each new law on the books and the amount of new taxes needed to pay for it.
At some point, the citizens might just realize that there are a lot of laws on the books they just might be ok with.
“The average cost to incarcerate a prisoner in California has more than doubled over the past 10 years…”
Penny pinchers! The federal budget grew by 4x over that same period of time.
I just looked it up and it only doubled, from 1,788,950
million in 2000 to 3,456,213 million in 2010.
http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist01z1.xls
A China story.
Yesterday I commented that prices in some regions of China were starting to collapse by as much as 70%. I was mistaken. It is just over 62%, based on the reported numbers. They have a big overbuild problem, similar to Spain. Here is the link to the China story:
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20110711000005&cid=1102
While all of China isn’t going bust, I see this as an outlier that is the beginning of a financial breakdown. Just like everywhere else, the bubbles don’t all pop simultaneously, but start in one area and spread like a virus. I see this as the beginning of a greater financial collapse.
Just wanted to correct my error.
Apparently all those Foxconn and other sweatshop employees can’t afford to buy real estate (or cars or flat panel TVs, etc) after all. Who would have thought?
Chinese are cash rich, cash-flow poor.
Americans are cash-flow rich, cash poor. At least those with jobs.
Cash-rich Chinese are cash-rich primarily because of two reasons:
1. one child policy leading to multiplied inheritances
2. real estate
Factor 1 is keeping 2 going. The older generation doesn’t know how to spend money. For the most part they have very frugal tastes. They don’t drive, they don’t travel abroad for vacations, they don’t wear fancy clothes etc. Their only weaknesses are smoking and providing everything and more for their kids & grandkids.
Now for the GenX/GenY types, they know how to live the good life. They like to dress well, own the latest gizmos, drive the latest cars, travel abroad on vacation and eat out (yes Chinese food in China can also be expensive).
So in some sense all the increase in valuation is a one-time trick whose time has run out. Prices are ridiculous - I saw a 1400 sq ft good-but-not-luxury apartment for over 1.2 million USD in a random part of Beijing. It would get a maximum of 2000 USD in rent, probably closer to 1500 USD per month. Rents have shot up crazily. But rents are determined by cash-flow and not wealth, and it doesn’t look like they can climb by that much more.
“I was mistaken. It is just over 62%, based on the reported numbers.”
Where are these numbers reported? Not in the article you link to.
Diogenes, I can’t see that 62% number in the story you linked. It seems to be rather confusingly written, but the only prices given for the city of Ordos that I can see are are an average price of Yuan 7,000 per m2 (at some unspecified time in the past) and a recent price of Yuan 13,000 per m2 for some presumably high-end buildings. Can you point where the 62% fall comes from? Thanks.
Hey, everyone. Hope you enjoyed Thanksgiving. I had a lovely day with a lot of my family (bro and his were with the in-laws). Flew home yesterday. Two on time flights; got there and back on Metro; no need to check bags; I even had an empty seat next to me on the way home. The chocolates I brought to the feast got my bag some extra scrutiny (sniffed for explosives I think), but my person only got the standard screening. They didn’t even take the wrapping paper off the chocolates when I offered.
Nearly all of us trooped out to take the kids to the movies around 6:30. The new muppet movie is highly recommended. Especially when your cousin’s mother-in-law decides to pay for everyone. Part of our group went to the new Twilight movie. My uncle said it was practically a curriculum in making a terrible movie.
If anyone is interested in a call center job, Vermont teddy bear company (also pajamagrams) is hiring as fast as they can find and train people who read and speak clearly and can use a keyboard. They will go back to their regular staff (less than 30) once Valetines Day is over and there will be a significant reduction between Christmas and early February, but right now they are trying to get up to 500 people. About $9 an hour.
We walked around the Burlington central shopping district on Friday. Lots of people around, but not overly crowded. Some packages, but not that many. Reports were that the big crowds were around the chain stores early for the door busters, but things pulled back once the extra special sales were over. We didn’t even stay long enough for the parking to start costing money (first two hours are free). Bought nothing.
Looks like the peon-parks also are on the “cut-or-$hut!” list. :-/
That would be a shame. Through good times and bad, Republican and Democratic leadership, the state parks have been built, protected and maintained.
During the Great Depression, the national and state parks actually received a great deal of attention, with workers building new roads and facilities. With this recession, the worst since the Great Depression, government is retrenching instead of sustaining its jewels. Why?
Hanging a ‘closed’ sign on state parks:
State Park Struggle:
By GARY A. WARNER / OC Register Travel Editor
In all, state parks cover 1.5 percent of California. They are a huge draw, with more than 65.5 million people visiting a park each year. Visitors stay in 14,351 campsites and hike 5,095 miles of trails.
Those who don’t want to see that happen need to get involved one way or another, said Jerry Emory, spokesman for the California Parks Foundation.
“One, visit state parks,” he said. “Two, volunteer. Three, support legislation and other pro-park actions. Four, spread the word!”
The foundation would like to be the vehicle for spreading that word and is looking for new members and donations.
Just got back from a train trip to the east coast.
1. Yesterdays posts on the collapse of manufacturing were apt. You get a front row seat perspective on the collapse from a train.
2. I picked up the economist for the train. I have to say yesterdays discussion of the European crisis is spot on. This is all about having the PTB take control of government.
a. They allowed the imbalances to grow to this level
b. The national debt problem of these countries was well known yet they paid rock bottom interest rates. Banks were encouraged to purchase these bonds.
c. I think it’s unlikely that Merkel wants the EU to collapse, but they won’t print the wall of money to save the system until another pound of flesh is removed from the middle class and GS and other elite alums have assumed power either directly or via a proxy in all of the peripheral states. Democracy be damned. Greece, Italy, adn Spain have all fallen.
On investments
1. I just purchased a cheap place to live and paid cash. A hedge against FDIC changing the rules.
2. Other than food I have about a 10 year supply of things that I need. A hedge agains inflation, the shortages of deflation, and the very likely VAT tax I see coming.
3. CASH and treasuries still #1 investment
4. Energy a few small speculative plays in energy in mostly cash rich companies.
5. Energy efficiency, bicycles, and an electric car.
6. Still looking to purchase a pile of solar panels. The price continues to fall, but the US may start to put it’s foot down on Chinas dumping and tax breaks may disappear so now is the right time to buy. Anyone with a profitable business should look into this.
7. Considering gambling on the EU bailout this week. EU banks and or foreign bond fund. ?
Did you actually do all that investment stuff or are you just listing it all? #1 and #2 sounds very Oil City.
Not sure what you mean by oil city?
Going into the year I was 80-90% cash and treasuries mostly treasuries. I sold some of those and purchased a low end house. We’ve moved 3 times in the last 6 years and the wife was getting tired of it and we couldn’t find anything to rent that we wanted to live in close to work and school. I expect to loose money on the house but not much more than I’d be out renting. I sold my last house on my own and will do that again when the time comes. I also wanted a place to put solar panels.
Yesterdays posts on the collapse of manufacturing were apt. You get a front row seat perspective on the collapse from a train.
Interesting how much you miss from row 15 in the airliner. Flyover Country is forgotten America, all it’s good for is providing burly young men to serve in our mercenary military (which I believe will one day be used against the citizenry).
And what, in your opinion, are the two coasts good for?
Another article I read on the train was about how Germany was moving to a volunteer military as opposed to a mandatory draft.
My guess is that this sort of system attracts many mercenary type soldiers ie ones willing to put money and advancement over civil rights and their average citizen. A broad draft would certainly produce an army less willing to fire on it’s own citizens.
“…A broad draft would certainly produce an army less willing to fire on it’s own citizens….”
Like it did in Viet Nam?
“I’ll pick up a gun, but I won’t guarantee which way I’ll point it.”
“No Vietcong ever called me ‘nigger.’”
Kent State?
Fragging?
About the only good thing a draft produces is a citizenry united by a deep and abiding hatred of the military they were drafted into.
And a “volunteer” defense force places the ultimate burden of death by organized violence on the lowest economic class in the country.
Do you really think the enlisted ranks sign up because of the great pay and benefits?
About the only good thing a draft produces is a citizenry united by a deep and abiding hatred of the military they were drafted into.
Was it this way in WWII?
My guess is when the population believes the war is needed and that the countries safety depends on it you don’t get this to the same degree. We were more of a nation then, now it is more everyone for themselves.
Ask a rank and file WW2 vet what they thought of the military they were drafted into– it wasn’t any more popular then than it was in the 60’s. It just wasn’t as easy to get out of when the local draft board knew where you lived and when you graduated..
Or better yet, read some of the literature of the time– not the War Department propaganda in the popular press and Hollywood movies, but the novels that came out of it. Vonnegut, Mitchener, Heller, come to mind….
And yes, the enlisted ranks of the 2000’s did indeed sign up because of the (relatively,) great pay and benefits– as you just said. A $30,000 signing bonus is more money than the average po-boy 18-year-old enlistee will ever see in one place again. Enough for a new pick-up truck, or a kitchen addition on Mom’s house. And if you die, your widow gets $435,000 if you sign up for the optional life insurance program. Such a deal….
Most of the kids I know who got suckered into Iraq2 thought they were signing up for a college scholarship program. Or a path to a green card. Or a “career.” And not a few got the choice between joining the army or going to jail (ahem , Trick/Track/Truck Palin or whatever his name was….)
Re: Collapse of manufacturing seen from the railway track: I first noticed this about 20 years ago. Had I been in the US earlier, I might have seen it even earlier - from whatever I have read, this started in the 70s. I doubt there would be any difference between say 2000 and today. The core of civilization by the tracks has been dead for a long time.
Re: VAT - great idea. I’ve been advocating this for a while. About time it was brought in. It will hurt the export-oriented economies the most if properly implemented.
“VAT - great idea”
The Value Added Tax is distortionary. The deadweight loss it creates would represent a loss of value.
Why do you think it is such a great idea? Or were you just repeating what everyone else says about it?
I think it is inevitable. There are just too many people in the country that pay no Federal taxes.
I actually think it is a great idea as well as long as the proceeds are used to minimize the regressive nature of the tax.
The VAT decreases the advantage of manufacturing overseas.
I think we should have a big VAT, and energy tax with all the proceeds used to do away with the payroll tax.
ie make imports energy and foreign labor more expensive and US labor less expensive.
Re: solar - a installed grid tied system is now less than $3.00 watt @ 25yr for 4-5KW size system(20-35 panels). Bottom line, if you live in one place for 20 years you will make way more than a T-bill on your money. Option #2, You can lease the system and you don’t get the big return but you don’t put up much money up front and can cut your losses if you need to move in a few years.
Any links to good deals on solar panels?
I started with eBay to figure what the hardware costs for Do-it-Yourself systems in the size I wanted. I then used the web to locate installers/contractors. I narrowed it to 3-4 offers and finally selected a system with discrete micro-inverters for $18,000. Add another $1000 for site prep and Aux power connector and I’m in at $19,000 for 5.5KW. So given current pricing you could do the same system for less than $16,000. Warning, both the US and China governments are at the brink of erecting trade barriers so the prices may start changing.
Blue how would that pencil out say farther south where the central ac runs a lot during summer? what if you go over 5500 watts? how does that work?
and I’m in at $19,000 for 5.5KW.
I have a grid tied system which means (simplified) my meter runs both ways. It also means if the grid goes down so do I (no batteries yet). If I draw more than 5KW during peak summer heat then I will be a net user of kilowatts that month but even so I will have a really small electric bill. If I’m a net generator of power the first year then this system will pay off faster but if I just offset 90% of my annual electric bill I will be a happy camper.
There are DIY 5000KW systems with everything but the permits and the physical install for less than $10,000 on eBay right now.
thanks….now if they could put $1000 worth of solar cells on a car to run almost without gas….oh wait… what the heck $10,000 to compete with the chhhevy Volt.
“Just got back from a train trip to the east coast.
1. Yesterdays posts on the collapse of manufacturing were apt.”
I told you so.
How the Government Is Creating Another Housing Bubble
By Peter Wallison and Edward Pinto
Tuesday, November 30, 2010
It is hard to believe, but it looks like the government will soon use the taxpayers’ checkbook again to create a vast market for mortgages with low or no down payments and for overstretched borrowers with blemished credit. As in the period leading to the 2008 financial crisis, these loans will again contribute to a housing bubble, which will feed on government funding and grow to enormous size. When it collapses, housing prices will drop and a financial crisis will ensue. And, once again, the taxpayers will have to bear the costs.
In doing this, Congress is repeating the same policy mistake it made in 1992. Back then, it mandated that Fannie Mae and Freddie Mac compete with the Federal Housing Administration (FHA) for high-risk loans. Unhappily for both their shareholders and the taxpayers, Fannie and Freddie won that battle.
Now the Dodd-Frank Act, which imposed far-reaching new regulation on the financial system after the meltdown, allows the administration to substitute the FHA for Fannie and Freddie as the principal and essentially unlimited buyer of low-quality home mortgages. There is little doubt what will happen then.
…
FHA loans are 3.5% down. The FHA loan limit is back up to 729,750. I’ve listened to a local DC news radio interview with a real estate representative cheering the increases. He reminds us pointedly that the limit is being reset to “where it used to be.” Both he and the host are aghast that private lenders require 20% down as that would be nearly 150K for a 730K loan. The realtor and interviewer nod that needing only 25K down is much more manageable.
High comedy.
The comedy would be far more enjoyable if it were not a political reality.
I guess it’s more like gallows humor to many of us.
Its not taxpayers who foot the bill as we continue to run a huge budget deficit. Its savers and holders of US$s and bonds who will pay for this.
Andrew C. McCarthy
National Review Online
November 26, 2011 4:00 A.M.
Republicans Subsidize Mansions
The GOP is missing its chance to stand for limited government.
Almost two weeks ago, when they figured no one was watching, the Republican-dominated House of Representatives, by an overwhelming 292–121 margin, voted to increase funding for the Federal Housing Administration. Just as government debt hit $15 trillion, edging closer to 100 percent of GDP, these self-proclaimed scourges of spending decided Uncle Sam should continue subsidizing mini-mansion mortgage loans — up to nearly three-quarters of a million dollars.
Given the straits that the mortgage crisis has left us in, to say nothing of the government’s central role in getting us there, one might think Republicans would be asking whether the government should be in the housing business at all. “Stop out-of-control spending and reduce the size of government” — that is what Boehner, Cantor, & Co. promised in big bold letters during the 2010 campaign. That was in the snippets of text that occasionally interrupted the gauzy photo spread they called their “Pledge to America.”
Instead, here we are a year later, careering toward the cliff. We ought to be doing everything in our power to tee up the 2012 election as a high-noon showdown between Obama’s insatiable Leviathan and a GOP vision of fiscally sane, constitutional conservatism. So how do Republicans respond to their moment? How do they propose to “stop out-of-control spending and reduce the size of government”? Why, by putting taxpayers on the hook for shaky loans on luxury homes — sure to add prodigiously to the already $142 billion (and counting) housing bailout attributable to Fannie Mae and Freddie Mac.
…
The GOP is missing its chance to stand for limited government
I think we all know that the “limited government” talk is little more than posturing. The government swelled during the previous admin, but in the parts that the GOP likes (such as defense).
The GOP wants to stop subsidized school lunches and food stamps, but they really aren’t interested in “limiting government”. Watching government (and deficits) swell under the Bush admin was one of the straws that broke my back and made me leave the GOP (not that it made any difference).
‘I think we all know that the “limited government” talk is little more than posturing.’
Well of course. But if nobody points out the hypocrisy, the average member of the sheeple herd is unlikely to notice it.
Gov spending also swelled under Reagan and GB #1, and well most presdidents.
http://zfacts.com/p/318.html
For the record, I looked up FHA requirements. Anyone can get an FHA loan if they meet the income requirements. They can put 3.5% down, but they have to pay something like 2.5% extra in PMI fees to FHA in exchange for the gov guaranteeing the loan. You can cancel some of the fees when you reach 22% equity and 5 years. To be honest, you’re almost better off putting 10% down with a conventional loan and put $$ every month to principle.
Just like Obama and the Dems, the GOP campaigns on one thing and then does just the opposite. Do you think the bribes paid to congressmen are for nothing?
It must be pretty tough for GOP lawmakers to decide between sticking to principles and accepting bribes.
Doesn’t seem to be that tough.
It’s going to require a crisis or a wholesale sweep-out of Congress to make them change policies which they perceive are to their own benefit.
What is it that they love so much about single-digit (all-time low) approval ratings?
American voters are knuckleheads
Published: Sunday, November 27, 2011, 11:05 AM
Star-Ledger Staff By Star-Ledger Staff
Andrew Harrer/BloombergThe U.S. Capitol building
A recent poll reveals that Congress has a 9 percent approval rating — its all-time low. And as shocking as that number is, headline writers have missed the real story:
9 PERCENT OF AMERICANS, KIDNAPPED BY ALIENS, HAVE JUST RETURNED HOME!
Or this one:
IT’S OFFICIAL: MOST AMERICANS ARE SADISTS!
Because, despite our disdain for the bickering, out-of-touch, dysfunctional partisans on Capitol Hill, we keep sending the vast majority of them back to Washington.
And that makes us, American voters, the Knuckleheads of the Week.
Since 2000, these are the re-election rates for the House: 98, 96, 98, 94, 94 and 85 percent. And for the Senate: 79, 86, 96, 79, 83 and 84 percent.
In other words, we tell Congress: You really stink. Here’s my vote. Now go stink some more.
…
Americans hate Congress except for the ones they sent. Nothing will change until they start to hate those, too.
“Americans hate Congress except for the ones they sent. Nothing will change until they start to hate those, too.”
Exactly. It wouldn’t matter if “congress’ approval rating” is 1%. Why would congressman Joe from Oregon care what the rest of the country thinks of him? And why do WE care what the rest of the country thinks of him? The only way to “vote the bums out” is to convince their constituents that their representative is evil incarnate. It’s been done, but not often.
Ben,
I can’t post more today. Need to get busy with work projects.
However, I think an interesting topic would be Government Employee benefits vs. those who pay for them.
The latest data I have show that about 17% of US workers are “government employees”. Let’s round it to 20%, which is one in 5.
Many get to retire after 20 or 30 years of “employment”, regardless of their age. So retirement in their late 40’s to early 50’s is becoming a trend. Fiscally, this is impossible. You can’t work for 1/2 your expected lifetime and collect a 90% retirement benefit for the second half.
Breakdown: Start age 20. Retire age 50 = 30 years.
Retirement to death = another 30 years (minimum).
The Retirement planning that lead to such ridiculous benefit packages was based on 1990’s stock market projections about “growth” in the 8-10% range from here to infinity. A simply unrealistic proposal.
However, when the markets went bust in 2000 and again in 2008, none of these “plans” were revised. (The housing bubble helped keep county coffers at all-time highs when revisions should have started).
You get your 30, you can collect a check the rest of your life, at near your exit salary.
In Greece, 40% of the people work for the “government”. They have early retirement at age 50. It is collapsing the Government. They would already be dead were it not for the bailouts of the European Union.
The US is bankrupt, too, but they FED’s can print money to cover over the financial shenanigans of the past 20 years. But all this does is devalue the money. Not immediately, but, in time.
How can we not be a poorer society as a result? At least a Poorer “working class” society? If you “got your 30″, I guess you get to live off the rest of us for the rest of your life, cause there is no way the “retirement plan” can cover the costs of your “pension”.
A 2% growth economy simply cannot generate the 8 to 10% “growth” needed to fund the pension plans. Safe investments are yielding less.
Us 401k folks are living with the “market forces”. If the markets don’t deliver, we loose, and yet the government will raid our incomes to support the pension plans of government workers. It’s cause for revolution.
You are either part of the “system” or you are fleeced by the government to support the system. How will this play out over the next decade?? Do you think we will see government pensions being “reduced”.?
Will we get a “bailout” for government pension plans?
Will we get a “bailout” for government pension plans?
I think the states will be left up the creek without a paddle as the liabilities will be huge. Taxpayers will revolt (with perhaps a few east coast exceptions) before paying for a bailout.
We have a collague at work who works remotely from the east coast. When he found out how low our property taxes are he was blown away. He said he pays 4x what we do. I find it hard to believe that his demographic will bend over to cover pensions when he doesn’t have one himself.
One offspring and spouse are teachers who started 12 and 14 years ago in a pacific NW state. They only have the equivalent of a 401k. No guaranteed pensions.
They don’t deserve pensions right Bill?
And how much are you drawing on your pension Bill?
20% is almost 18% higher than 17%. Rounding like that hurts your point.
What percentage of government workers have the deal you are describing? My guess is it is a pretty darn small percentage. Cops and firefighters mostly. That isn’t everybody.
One of my colleagues is planning to retire next fall. She will have 34 years of government service. Her retirement plan is fully funded despite the horrible market returns. She will get 68% of average of high three (or 5 if they change it). That includes base and location pay only. No overtime (we don’t get it anyway). No bonuses (not that there is any money for those either). No spiking of any kind. She gets no social security as the money she would have put into SS went into the retirement program instead. She is in her 60’s.
If she had started her government service just 6 years later, and worked the same number of years, her defined benefit pension would be just 34% of average of high 3 (or 5) plus she would have paid in to Social Security and would either have to take the low, start early amount or try to live on 34% of salary while waiting to collect until the full benefit retirement benefit age.
Is is a luxury to retire in your 60s? Yes, it is. But this is a woman who could have made outrageous amounts of money teaching people from a few industries how to avoid enforcement. She was part of the group that wrote the rules and set up the enforcement procedures. She didn’t sell out. She served her country and the ideal of fairness instead. A safe, though by no means high flying retirement isn’t too much to give for that sort of dedication.
We aren’t Greece. Not by a long shot.
Polly, does this pension include retirement medical care?
I won’t be putting in 30 years of service (maybe 25), but even now I can tell that likely won’t be enough. My best retirement plan is a paid-off house in the sticks.
If you retire fairly close to what your Social Security “regular” retirement age is (I think the limit is 5 years, but it might be less), you can stay in a federal group insurance plan until you hit Medicare eligibility. It is like having the right to be on COBRA for longer than the standard 18 months. Then there is some system for using your federal health insurance as your supplemental Medicare policy. You pay for it, but it is like what my father has with HP (his company was bought out by a company that was bought out by HP so he gets their retiree medical plan) - covers a lot of the Medicare co-pays.
What percentage of government workers have the deal you are describing? My guess is it is a pretty darn small percentage. Cops and firefighters mostly. That isn’t everybody.
Agreed. In out little burg city employees get a 403b (except cops and firefighters)
She’s FedGov, right? What I’ve noticed is that Federal Government employees aren’t all that massively compensated (my good friend just has a 401(k)). Most of the heavily compensated employees are in “blue” areas of the country, and seem to be concentrated among public safety workers (cops, firefighters, prison guards).
High inflation rates will take care of most of those pension problems.
Those people retiring in their 50’s are going to be hard up for money when they are 70.
That used to work very quickly when the pensions didn’t adjust for inflation. I think you will find that they do now, though the adjustment doesn’t really reflect the costs that seniors have. So the seniors may face hardships that will ease the burden on the cities, towns and states, but none of it (burden or help) will happen very quickly.
Whoa, pensions adjust for inflation?! In what universe?
I know that military pensions adjust for inflation. I have not heard of any others adjusting.
Why is it that Republican lawmakers can bring themselves to compromise on “low-income housing for millionaires” but not on tax increases for millionaires?
‘Tis a puzzlement.
Higher loan limits transform FHA into key source of financing
Congress has raised the maximum mortgage limits for the FHA while leaving loan ceilings untouched for Fannie Mae and Freddie Mac. This may make the FHA the go-to financing option for borrowers in high-cost areas.
By Kenneth R. Harney
November 27, 2011
Reporting from Washington—
After a year characterized by grumpy partisan gridlock, Congress came up with a Thanksgiving compromise that could change the mortgage choices of buyers and refinancers in more than 660 markets across the country: It raised maximum loan limits for the Federal Housing Administration while leaving loan ceilings untouched for Fannie Mae and Freddie Mac.
…
What motivated Congress to create separate-and-unequal rules that transform the FHA — traditionally a haven for moderate-income, first-time buyers with minimal cash — into a key source of financing for buyers in upper- as well as mid-bracket markets?
Nobody in Congress proposed this idea at the start. By a 60-38 vote in October, the Senate passed an amendment raising all three agencies’ limits to $729,750 in high-cost areas and 125% of the median sale price elsewhere. The goal — lobbied aggressively by realty and home-building groups — was to inject needed oomph into home sales. But Republicans in the House balked at doing anything that might prolong the existence of Fannie Mae and Freddie Mac, both the targets of scathing criticism for their multibillion-dollar costs to taxpayers and big bonuses for top executives.
What ultimately emerged from the legislative scrum was the compromise penalizing Fannie Mae and Freddie Mac, while boosting FHA. House Republicans weren’t enthusiastic about helping the FHA either — the agency faces its own financial challenges — but unlike Fannie and Freddie, the FHA is subject to congressional appropriations and closer oversight. Republican critics held their noses and voted for the plan.
What will this mean for buyers from now through the end of 2013, when the compromise expires?
“There’s no doubt this will drive more business to FHA,” said David H. Stevens, former FHA commissioner and current president and chief executive of the Mortgage Bankers Assn.
“FHA is going to become the darling of the industry again,” said Annie Austin, a loan officer with Cobalt Mortgage in Bellevue, Wash.
Bob Walters, chief economist of national lender Quicken Loans, said he thinks the increased loan limits will benefit many consumers, “especially those looking to borrow larger amounts,” he said, but who “are in a credit situation where Fannie Mae and Freddie Mac loans are not available or optimal.”
…
The RNC trolls sure are scarce around here these days. No less than six months back, 2banana and other party hacks would have been launching ad hominem attacks on me right and left for that post.
We sure do miss you guys!
We sure do miss you guys!
PB, y’all wanted your echo chamber as you chased away anyone with an opposing viewpoint. Hope you are enjoying it.
I never chased anyone away. I welcome discussion, provided no ad hominem attacks are involved. I suppose those without any rational arguments to support their beliefs have little recourse.
Pretty thin skinned and unsure of their thesis if they left due to the posts here. Most just highlighted the GIANT factual holes in their arguments.
I imagine it’s tough to have others point out the idiocy of your own arguments.
One more thing, drumminj:
As the creator of the Joshua Tree Extension, you realize more than most posters here that anybody who doesn’t care to read what I have to say can easily set up their system to skip all my posts. That ought to help shield thin-skinned maroons from the annoyance of having somebody point out the flaws in their feeble arguments.
anybody who doesn’t care to read what I have to say can easily set up their system to skip all my posts
That doesn’t justify your (and other posters’) hostility towards anyone with an opposing viewpoint. Why even waste one’s time?
The paymaster must see a win in the bag. OWS and unions have been crushed. No need to pay for low brow hacks.
intellectual coward
“Republican critics held their noses and voted for the plan.”
Dear Republican And Democratic Congressman,
How large were the bribes paid to you by NAR, MBA and NAHB for passage of this legislation?
Please Respond.
Sincerely,
The US Voting Public
FAMILY FINANCES
NOVEMBER 27, 2011
When the Budget Calls for a Move Back Home
By RACHEL LOUISE ENSIGN
The Thanksgiving festivities are over, but three generations of Cindy Ross Vogt’s family are still sitting down to dinner together in Shasta Lake, Calif.
That’s because Ms. Vogt’s 37-year-old stepdaughter and 15-year-old stepgrandson moved in with her and her husband in 2010, after the stepdaughter couldn’t find a job and went back school to eventually become a nurse.
“I tell myself it’s not going to be forever,” Ms. Vogt says.
Call it boomerang living. With the effects of the lousy employment, stock and real-estate markets taking their toll, adults of all ages have been finding they can no longer afford to live on their own. So they’ve been moving back in with Mom and Dad—sometimes with a spouse and kids in tow—to save money and get back on their feet. Meanwhile, more elderly parents, facing smaller nest eggs and higher health-care costs, are moving in with their adult kids.
Over 50 million Americans lived in multigenerational homes in 2009, up 11% since 2007, according to Census Bureau data.
…
I am fully expecting this to be the case with my kids. The extended family will be the new normal. And in some cases that might not be a bad thing in and of itself.
More like the old normal. You know who else boomeranged in their 20’s? Almanzo Wilder and his wife Laura Ingalls Wilder, who moved in with the Wilder parents. They were there for a year, and then moved to Missouri. Even after that, the parents had to help the Wilders buy their Missouri property outright so they could survive.
To be fair the to Wilders, most of their hardship was due to bad crops, a house fire, and diptheria, which nearly killed Almanzo to where he needed a cane to walk.
Laura and Almanzo didn’t achieve any measure of wealth until Laura wrote the Little House books in her 60’s.
“…until Laura wrote the Little House books in her 60’s.”
Thanks for offering hope to the post-50 set who are still hoping for a measure of wealth and success.
IMF prepares bailout package for Italy
Sun Nov 27, 2011 1:20PM GMT
The IMF headquarters in Washington, USA.
The International Monetary Fund (IMF) has prepared a bailout package worth up to 600 billion euros in case Italy’s sovereign debt crisis worsens, a report says.
The loan of between 400 billion and 600 billion euros would allow Italy to implement reforms including budget cuts and growth-boosting within 12 to 18 months “by removing the necessity of having to refinance the debt,” Italian newspaper La Stampa quoted IMF officials as saying on Sunday.
The IMF would guarantee rates of 4.0 percent or 5.0 percent on the loan — much lower than borrowing costs on commercial debt markets, where the rate on the country’s two-year and five-year bonds has reached above 7.0 percent.
Since the IMF may not be able to use its current resources due to the size of the loan, different possibilities, such as possible action with the European Central Bank (ECB) in which the IMF would be the guarantor, are being examined.
“This scenario is because resistance from Berlin to a greater role for the ECB in helping states in difficulty — starting with Italy — could be overcome if the funds are given out under strict IMF surveillance,” the report said.
…
I love it. The drowning man already has two anvils tied around his neck. Let’s throw him another one.
IMF may use $800B to save Italy
AFP
November 28, 2011 12:10AM
Phone a friend: Italian Prime Minister Mario Monti may be about to receive 600 billion euros from the International Monetary Fund to help get Italy out of the mess it is in. Picture: AP
THE IMF could bail out Italy with up to 600 billion euros ($817 billion).
The money would give Italian Prime Minister Mario Monti a window of 12 to 18 months to implement urgent budget cuts and growth-boosting reforms “by removing the necessity of having to refinance the debt,” La Stampa newspaper reported, citing IMF officials in Washington.
The IMF would guarantee rates of 4.0 per cent or 5.0 per cent on the loan - far better than the borrowing costs on commercial debt markets, where the rate on two-year and five-year Italian government bonds has risen above 7.0 per cent.
The size of the loan would make it difficult for the IMF to use its current resources so different options are being explored, including possible joint action with the European Central Bank in which the IMF would be guarantor.
“This scenario is because resistance from Berlin to a greater role for the ECB in helping states in difficulty - starting with Italy - could be overcome if the funds are given out under strict IMF surveillance,” the report said.
…
How did $800 bn become the magic bailout number? Sounds like this bailout was made in DC, just like the Fall 2008 bailouts were.
Another point supporting an orchestrated collapse in the EU as a power grab.
Public debt as a % of GDP
1. Japan 212
2. Greece 167 in the table used for 4 and 5 Greece was 183.
3. Iceland 133
4. I think US is near 100
4. Spain I believe is around 70 another table titled gov debt % GDP
France is 89 and Germany 82.??
5. Italy 121
Bond rates 10 year
Greece 24%
Japan 1%
US 2.2%
Spain 5.5%
Italy 5.9%
I think Iceland is around 5-6% the table I have didn’t list it.
Now some of this is because private debt is higher in some of these countries (spain) and some is because Greece Spain and Italy can’t print money ie no quantitative easing w/o the help of the EU. Still it suggests that as soon as the EU, GS, Wall Street/banking elite ie the PTB get teh changes they want they will be able to drop interest rates and thus the debt burdon on these countries and save the system. Assuming the growing ranks of pooor in these countries don’t riot of course.
Not to worry — it looks like the IMF is coming to the rescue now.
Assuming the growing ranks of pooor in these countries don’t riot of course.
They aren’t as docile as Americans. The local Communist Parties will have a field day.
Greek 2 year bond rates are 120% now:
http://www.bloomberg.com/apps/quote?ticker=GGGB2YR:IND
http://www.bloomberg.com/news/2011-11-27/imf-readying-600-billion-euro-loan-offer-for-italy-stampa-says.html
IMF readying $794 BILLION loan for Italy. Since US taxpayers fund (officially) 17% of the IMF’s budget, that means another huge back-door bailout for the banksters.
Thank you, Obama voters. Thank you, McCain voters. F***ing tools.
Read what you wrote again. It is a loan. Which will most likely be paid back because it will be linked to some nasty punitive clauses. 5% interest rate in Euro terms. I would love to put some of my money in this, problem is I can’t.
“…problem is I can’t.”
It pays to be a banksta…
Color that money gone. Along with the other trillions that the Fed has “lent” to its bankster accomplices to cover their gambling debts.
The answer is always more debt.
Sammy, I’m totally with you on this, but isn’t it Congress who is allocating the funding for the IMF, not the pres?
Granted, it’s still the same voters who enable this crap.
I’d be interested in better information on who gets to allocate IMF bailout funding. The impression I have from a limited amount of reading is that there is a morass of confusion and posturing over whether the U.S. should play a role in bailing out the eurozone. Whether any top U.S. policymaker(s) are pulling strings behind the curtain is certainly a question that should interest all Americans.
In euro crisis, US gets crash course in EU bodies
By Gregor Waschinski (AFP) – 10 hours ago
WASHINGTON — As Europe’s sovereign debt crisis rattles financial markets and threatens the US economic recovery, political leaders in Washington are struggling with the arcane institutional structures that shape decision-making in the European Union, analysts say.
On Monday, President Barack Obama hosts this year’s EU-US summit, welcoming European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso and EU foreign policy chief Catherine Ashton.
According to European officials, the main focus of the White House meeting will be the global economic situation.
Leaders are expected to discuss responses to the eurozone debt crisis, even though the three guests from Brussels are only playing a minor role in Europe’s efforts to contain the financial turbulence.
With a multitude of actors on the national and European level, the EU governing system can appear to outsiders like a mind-boggling maze.
“It’s kind of like a state, but it’s kind of not. It’s kind of an international organization, but it’s kind of not,” said Tyson Barker, director of the transatlantic relations program at Bertelsmann Foundation, a think tank.
“We talk about the EU as an economy sometimes, but then we talk about France, Germany and its individual components. It’s a very hard concept to grasp in the United States.”
The absence of one single economic government for the eurozone and the need for 17 parliaments to ratify major decisions such as the creation of the rescue fund, the European Financial Stability Facility (EFSF), are not always clear in Washington, added Jacob Kirkegaard of the Peterson Institute for International Economics.
“With the exception of a few people at the very top of the Treasury and the Fed there is a very poor understanding, and certainly in the financial markets here in the US, about what are the political and institutional constraints facing policy makers in the euro area right now,” he said.
The lack of speed at moving forward a resolution to the eurozone crisis has led to frustration in the US, with Obama repeatedly urging Europeans to take action and Treasury Secretary Timothy Geithner even joining a meeting of EU finance ministers in Poland in September.
The US administration is worried that bad news coming out of Europe could have a negative effect on weak economic recovery here and ultimately damage Obama’s re-election chances in November 2012.
Republicans in Congress have also voiced concern about bailing out profligate Europeans with US taxpayer cash via the International Monetary Fund.
Representative Cathy McMorris Rodgers, a party leader, called on Obama last month to veto any new IMF aid to the EU.
Meanwhile, Europeans are growing tired of what they say is finger-pointing by a nation that is itself weighed down by $15 trillion of debt.
“It’s always much easier to give advice to others than to decide for yourself,” German Finance Minister Wolfgang Schaeuble said in September.
“Both sides are sniping at each other,” observed Barker, who nevertheless pointed out that there is “a much broader layer of cooperation that goes unnoticed.”
…
Given the economic “blowback potential,” the eurozone crisis should be the number one US foreign policy concern, Barker said.
“But none of our politicians at the top level has been able to communicate the gravity to the American people.”
Barker sees the debates of the Republican presidential hopefuls as a good barometer for public understanding of the crisis.
“The only time it came up all the candidates had the consensus view that the United States should not bail out European banks,” he said.
In the light of the complexity of the problems and the risks for the US economy involved “this is not a very sophisticated prescription.”
…
Congress will never allow this. Can Bernanke do some back door money printing?
At the eod, this is just another rumor before markets open.
Will America break the eurozone deadlock?
By Bill Jamieson
Published on Sunday 20 November 2011 16:00
FEAR, uncertainty, paralysis – the eurozone crisis is freezing up the economy and markets. For investors, the deepening stand-off in the eurozone and the worsening outlook at home has brought a sense of entrapment.
Sovereign debt strains are moving from the periphery to the core. There is a clear sense that this crisis is now coming to a head, with an outcome that could see world stock markets plunging to their lows of March 2009 and below.
How do we get out of this? The desperate hope in markets is that German chancellor Angela Merkel and the European Central Bank (ECB) will relent and agree to stand behind debt-stricken eurozone members through a massive quantitative easing programme. Should this happen, stock markets in Europe and around the world would bounce very sharply upwards, mocking the growing number of those who have sold out in recent months. If it doesn’t happen, we could be in for the mother of all market collapses.
…
There are formidable obstacles to the view that a German capitulation will miraculously lift the black clouds now gathering over markets. First, bail-outs by the ECB are outlawed by European Union treaty.
Second, such a volte face could be political suicide for Merkel, who is accountable to a German electorate already apprehensive over the consequences of opening the monetary sluice gates. It is not just the haunting historical fear of hyperinflation that accounts for German reluctance to go down this route; the country’s post-war economic success has been largely founded on monetary stability. A nation throws this away at its peril.
Third, it would be seen to be letting high-spend, high-debt countries off the hook, enabling them to carry on as before in the knowledge that they would always be bailed out.
And fourth, there is no guarantee any such easing – surrounded as it would be by conditions giving Germany effective oversight and control over national budgets – would be acceptable to voters. They would resent such oversight, fuelling political divisions and undermining the very integration Merkel advances as a solution.
This is the paralysing deadlock we have now reached. Its immediate result is a deepening economic contraction across Europe. However, exposure by no means stops there. According to ratings agency Fitch, America’s five biggest banks have $188 billion (about £119bn) of gross exposure to France alone, including $114bn of exposure to French banks, equivalent to a quarter of their Tier One capital.
JPMorgan Chase and Goldman Sachs, two of the biggest traders of credit derivatives, have sold protection on more than $5 trillion of debt – much of it on the debt of eurozone countries. Hence the ominous signs of another freezing of interbank lending.
So if the ECB is reluctant to step up as lender of last resort, who might? Veteran market commentator Ed Yardeni suggests the US Federal Reserve will spearhead the formation of a Global Liquidity Facility (GLF) to avert a global financial meltdown.
He says: “Fed chairman Ben Bernanke demonstrated he is a master at putting together such emergency measures back in 2008. In effect, it would act as the world’s central bank. Bernanke is clearly very worried about the prospect that the European sovereign debt crisis is a contagion that could spread to the US.
“The GLF would receive deposits from the Fed and other participating central banks, including the ECB. The funds would be used to buy the bonds of debt-challenged governments that would be required to accept strict supervision of their fiscal and regulatory policies by the IMF.”
This would be immediately credible in markets, acceptable to voters in debt-stricken countries and would move the world back from the brink. It would be a humiliation for the eurozone political elite. But I suspect their protestations would be drowned out by a world-wide sigh of relief.
…
2 critical pieces missing in this article.
1. What would the American people think of this? Does Bernanke want to risk the Fed’s legitimacy further? There is no way the Fed can survive with this sort of open bailout of foreign profligates.
2. Let’s just say genocide Bernanke does it. Actually I expect him to do it. How much time will this “solution” buy? 6 months? 2 yrs? What after that?
“Congress will never allow this” Butters? Be serious. Congress is owned by Wall Street, and the docile and stupid US electorate - at least the 95% who voted for Obama and McCain - will meekly bend over on demand for this bailout, too.
Always Negative Nattering Nabobs (ANNN) are stunned:
http://news.yahoo.com/black-friday-sales-7-pct-retailers-look-ahead-225658613.html
Beware of rival shoppers armed with pepper spray. Better yet, never set foot in Walmart, and avoid this class of customer entirely.
Woman surrenders in Black Friday pepper spray incident
By Michael Martinez, CNN
updated 4:51 PM EST, Sat November 26, 2011
“I saw people around me, they got it really bad,” said one person who was shopping when the incident occurred.
Los Angeles (CNN) — A southern California woman turned herself in to authorities as the person who pepper sprayed video-game shoppers in a Walmart during Black Friday’s shopping frenzy, Los Angeles police said Saturday.
…
Leave her alone.
Let’s find the guy who authorized the killing of 24 Pakistani troops for no reason….
No authorization needed when under fire.
Of course it is.
Will ‘Euroquake’ go seismic?
Sun, 2011-11-27 15:20 — editor
United Kingdom
Hemantha Abewyardena writes from London…
…
Even the folks who don’t believe in Mayan cryptic writing, instinctively feel that the year 2012 is going to be a pretty ‘tricky’ one. Since most of the major banks are exposed to debt problems of European nations, how they are going to find cash to deal with debt obligations next year, understandably, attracts universal attention. It is much more precarious than banks want us to believe.
To make matters worse, the growth seems to be as illusive as ever as far as the EU are concerned. The growth forecast for the UK was announced as just 0.5% with record youth unemployment. Strikes and mass-walkouts are becoming normal events when the austerity measures start biting. On Wednesday, there will be a general strike in the UK which has the potential to bring the whole country to a standstill.
Despite the unity displayed by the political elite in public, the leaders of the richer nations seem to be bracing themselves for the doomsday. Some analysts believe that contingency plans are already drawn up for the worst possible scenario – the collapse of the euro.
…
Time To Move To Cash?
It’s getting increasingly dangerous out there.
Stocks have been declining sharply in recent days, and for good reason. Since November 15, the stock market as measured by the S&P 500 has fallen for seven consecutive trading days through Friday in posting a total decline of nearly -8%. At the heart of investor concerns is the increasingly unraveling situation in Europe. What was once largely considered a eurozone periphery problem only a few weeks ago is now being widely regarded as a eurozone core problem that threatens to bring down the euro currency altogether. Such an outcome would likely lead to a global banking crisis that could become vastly more severe than the 2008 episode.
The situation continues to deteriorate further with each passing day. Italian sovereign debt yields have skyrocketed. Not only have 10-year government bond yields moved well in excess of 7%, but the yield curve has also inverted with Italian 2-year bond yields spiking over 8%. Put simply, these are signs of extreme stress in the world’s third largest bond market. In addition, France’s bond yields continue to move higher, suggesting that the eurozone core is becoming increasingly infected. And even Germany, the eurozone’s largest economy and financial bulwark, endured a notably poor Bund auction on Wednesday, only adding to concerns that confidence in the region is falling apart. And these are only a few of the many troubling headlines coming out of the eurozone.
So where do stocks stand heading into the new week following this recent sharp decline? Unfortunately, stocks are nowhere near any major support levels. The S&P 500 Index ended the week at 1158, which is right in the middle of the previous trading range from early August to early October in the 1120 to 1225 range. While the pace of momentum deterioration has accelerated, it is far from any extremes. And the stock market is not yet oversold based on its Relative Strength Index. All of these factors suggest that further downside may be in store for stocks in the coming days.
All of this raises an important question – is it time to exit the stock market and move to cash?
…
Just noticed the Mexican Peso has dropped over 14% vs the Dollar since Sep. That’s a lot for our #3 trading partner to be manipulating their exchange rate. How come congress is silent about this and screams at China?
Country Exports Imports Total Trade Trade Balance
Canada 248.8 276.5 525.3 -27.7
China 91.9 364.9 456.8 -273
Mexico 163.3 229.7 393.0 -66.4
Japan 60.5 120.1 180.9 -59.8
“All of this raises and important question - is it time to exit the stock market and move to cash?”
Naw, wait and do what everyone else will be doing which is waiting until panic sets in and takes hold and forces stocks to hit bottom.
It is THEN one should sell out everything and THEN go to cash.
“…is it time to exit the stock market and move to cash?”
Since 1980 the dollar’s value increased about 3.5 times, which is roughly the same as corporate earnings. However, share prices are up about 14 times over the same period.
The world sure hasn’t run out of gloomsters just yet!
27 Nov, 2011, 11.29AM IST, PTI
Market outlook: No positives in sight for stock markets this week
NEW DELHI: With no near-term positive trigger in sight, amid weak rupee and investor concerns over slow growth of the global economy, Indian bourses are expected to see a gap-down opening on Monday with the trend continuing through the week, say experts.
Last week, the BSE’s 30-scrip index, Sensex, fell by over 4 per cent, eroding investor wealth by Rs 1.69 lakh crore.
“The near-term outlook remains negative and with no positive cues in sight, markets are likely to see a bearish trend,” said Geojit BNP Research Head Alex Matthews.
“Persistent selling by foreign institutional investors on fears of slowing domestic growth and weakening rupee is a cause of concern,” he added.
…
Equities may see more selling pressure
K.S. BADRI NARAYANAN
Outside the ring: Investors watch an electronic stock price display outside the BSE. Domestic investors are likely to wait and watch the market though foreign players seem to be riding the bear.
Weak rupee, global developments being keenly watched
November 27, 2011:
Equities are likely to suffer further this week due to lack of confidence from market participants, particularly from mutual funds, and weak rupee.
According to Street experts, mutual funds are not willing to commit themselves now despite several stocks ruling at multi-year lows, as the funds fear a further fall.
The market is now completely dominated by foreign institutional investors. They will persist with selling on the back of weakening rupee.
Foreign funds pulled out about Rs 7,300 crore in nine straight trading days since November 15, according to exchange data. On the other hand, domestic institutions’ net buying stood at about Rs 5,900 crore.
“We have taken a cautious stance on the Indian rupee in recent months and while the currency has weakened sharply, we do not yet see light at the end of the tunnel,” said a note from HSBC. “In an environment of moderating global growth expectations and broad de-risking, current account deficit currencies such as the Indian rupee will struggle. In our view, the INR has room to fall further if global growth expectations continue to decline and the US dollar liquidity pressures are intensifying.”
…
I brought up the 7.6% drop in the DJIA in the past couple of weeks during my Thanksgiving conversation with a finance professor. His response was, “It will come back.”
My gut level belief is that he is right, at least in nominal terms. In real terms, all bets are off.
And in full disclosure, I admit to thinking the Japanese stock market would come back when I saw it tank in the early 1990s. I turned out to be wrong on that conjecture.
Wall St down in historic week
by: Steven Russolillo
From: Dow Jones Newswires
November 26, 2011 8:10AM
US stocks eased lower this morning, capping the Dow Jones Industrial Average’s worst Thanksgiving week performance since markets began observing the holiday in 1942.
The Dow lost 25.77 points, or 0.23 per cent, to 11,231.78 in a shortened session, and finished the week down 4.8 per cent. Increasing sovereign debt worries in Europe and the US supercommittee’s failure to reduce the deficit were the main drivers for the week’s downdraft. The Dow has lost 7.6 per cent over the last two weeks and finished at its lowest level since October 7. It is down 3 per cent for the year.
The Standard & Poor’s 500-stock index dropped 3.12 points, or 0.27 per cent, to 1158.67. It has registered seven straight days of declines, falling 7.9 per cent during the streak.
The Nasdaq Composite fell 18.57 points, or 0.75 per cent, to 2441.51. The technology-oriented index notched its fourth straight weekly decline, dropping 11 per cent throughout the skid.
Trading volume was thin due to the Thanksgiving holiday; markets closed at 1pm US Eastern Time.
Belgium became the latest worry for investors after Standard & Poor’s Ratings Services yesterday downgraded the country due to renewed funding and market risk pressures.
Italian bond yields climbed following a weak auction of short-term bills. The yield on benchmark 10-year bonds rose to about 7.3 per cent. Yields above 7 per cent have previously prompted other eurozone countries to seek financial assistance.
Additionally, Fitch Ratings on Thursday downgraded Portugal’s debt to junk and warned additional downgrades were possible.
“With the weak Italian bond auction, the choppy market and everything else coming out of Europe, it’s a sense of ‘here we go again,’” said Joe Bell, senior equity analyst at Schaeffer’s Investment Research. “People are getting very concerned that the European politicians aren’t going to come up with any solutions anytime soon.”
…
“People are getting very concerned that the European politicians aren’t going to come up with any solutions anytime soon.”
People = GS and banking elite.
aren’t going to come up with any solutions anytime soon = solution and timing aren’t congruent with GS current goals.
Thus S and P and rating agencies are being used to ratchet up the pressure. You can bet GS is using it’s market manipulating programs that they admitted to having last year.
Economist new year 2012 had some other interesting facts
1. The number of publicly traded companies has been in a fairly steep decline. I can ‘t remember the numbers exactly but I think they said in 1997 there were 7000 and last year there were 4000.
You can chalk this up to several things.
Of course they blamed regulation but I think more important is the concentration of wealth. With a smaller and smaller # controlling a larger and larger % of the wealth it is easy to see that corporations owned by the elite won’t need to go to market. These corporation will also have other advantages, management will be limited in how much it can take for itself, well connected owners are more likely to have influence in gov, and raising cash costs less, and as noted above reporting requirements are less.
Articles suggested that upper level management WS and gov officials are all talking about this.
Again those that are afraid of socialism need to take a look around at what’s happening and who is winning. It isn’t the average citizen. Control of this country and others is moving more and more in favor of corporations and the elite. The power has extended to the point that they are able to topple d elected governments and replace them with henchmen. The state purse is used to bailout banks and the elite but cuts are forced onto the formerly middle class and the upper middle class are loosing their customers. When the elite brakev the law the law does nothing. Unions have been destroyed, protests against the elite are crushed by cops who are essentially paid by JPM and the federal gov.
So now I am slightly confused: Was this the worst Thanksgiving for Wall Street going back to 1942, or is 1932 the proper benchmark? I suppose it depends on how you measure “worst.”
Wall Street, world markets take a slide
By Kaitlyn Kiernan and Nikolaj Gammeltoft
Bloomberg News
Posted: Saturday, November 26, 2011 12:00 am
U.S. stocks tumbled in the worst Thanksgiving week loss for the Standard & Poor’s 500 Index since 1932 as concern grew that Europe’s debt crisis will spread and as American policymakers failed to reach agreement on reducing the federal budget.
Shares of Bank of America Corp., Hewlett-Packard Co. and Caterpillar Inc. dropped at least 7.6 percent to lead declines in the Dow Jones Industrial Average.
Energy stocks fell the most in the S&P 500 as oil declined for a second week and as Chevron Corp. lost 5.7 percent after it was blocked from drilling in Brazil while the government investigates a recent spill. Netflix Inc. slid 18 percent after raising $400 million to bolster cash.
The S&P 500 slid 4.7 percent to 1,158, closing at the lowest level since Oct. 7. The Dow fell 564 points, or 4.8 percent, to 11,231 this week.
“We’ve resumed focus on the European debt issues,” Terry Morris, senior equity manager at National Penn Investors Trust Co., based in Wyomissing, Pa., said in a telephone interview. His firm manages about $2.2 billion.
The situation in Europe doesn’t seem to be improving, which makes the market defensive, he said. Spending cuts taking hold in the U.S. will be a negative, too, because they will be a drag on economic growth.
The S&P 500 has fallen for seven days, the longest streak in four months, and has tumbled 7.6 percent so far this month. U.S. equities erased an early advance in the final session of the week as S&P lowered Belgium’s credit rating and Reuters reported that Greece was demanding that private investors accept larger losses on their debt.
…
How many poofs are in this article?
BofA, HP, CAT = poofs of at least 7.6 percent.
Chevron = a 5.7 percent poof.
Netflix slid 18 percent because it needed to raise $400 million of useless, worthless, unbacked fiats. Poof.
The S&P slid 4.7 percent - now there, folks, is a heavy poof.
And then there are the pending spending cuts in the U.S. Poof.
And, of course, there is Greece: “Greece was demanding that private investors accept larger losses on their debt.”
Larger losses = poofs for those on the wrong end of this debt.
And there is more to come…
Don’t worry combo. The ghost of Aladinsane will appear and tell you cash is worthless.
It would scare me if his ghost were to appear and say anything different.
It is then that I would know the EndTimes were sure to be at hand.
Dumb question of the day:
Will the recent Wall Street sell off somehow drive further U.S. housing price declines, or is it safe to assume at this point that the U.S. housing and stock markets are fully decoupled?
Prices have reached a permanent souffle-stlye level. There is no way they could possibly go lower. -David Lereah.
Britain’s most feckless father has 15th child… with two more on the way
By James Millbank
The jobless man branded ‘Britain’s most feckless dad’ for fathering 14 children has had another child – and two more are on the way.
Jamie Cumming, 34, from Dundee, who lives off benefits, has had 15 children by 13 different women – and is unable to pay maintenance for any of them.
Mr Cumming’s 19-year-old ex-girlfriend birth to his latest child, a son, two weeks ago. His current girlfriend, also 19, was last night due to give birth to another boy.
http://www.dailymail.co.uk/news/article-2066756/Jamie-Cumming-Dundee-Britains-feckless-father-15th-child.html#ixzz1ewAR8QvA
He has a long way to go before he beats our self centered pig family the Duggars.
http://tinyurl.com/6um7nvp
Wow, expecting No. 20? That’s some lady there!
This is why unemployment benefits and welfare are worse than a jobs program. The gravy isn’t endless for more kids and you don’t have all day to prey on 18yo girls when you are manually digging a ditch or painting stripes on a road.
Not all of them were 18.
Eleven?
Is this guy some kind of cult leader? Works like a charm on gullible women.
Here is an article pushing students to take more debt
news.yahoo.com/other-student-loan-problem-too-little-debt-180848793.html
To be sure, educators can’t help but admire the determination of students like Yeh; if that kind of responsibility was more common, the financial crisis might never have happened. And nobody blames students for being afraid amid a flurry of news about debt, like a recent analysis estimating the average debt burden for 2010 college graduates who borrowed was over $25,000, up 5 percent from the year before.
But getting almost no notice in recent reports was another stat: New borrowing nearly flattened out last year, according to the College Board, and actually declined on a per-student basis after accounting for inflation. Private borrowing (generally more dangerous to students) has dropped from about $24 billion in 2007-2008 to about $8 billion last year. A major factor is likely increased federal grant aid. But another may be students making more sacrifices to avoid loans.
It then goes on to support more borrowing.
My guess is students are doing
w/o a car
w/o their own room
working more
eating out less
buying fewer clothes
going to cheaper schools
living at home
The Home Equity Loan bank of Mom and Dad is gone.
Filling affordable housing units is easy as pie: JUST LOWER THE PRICE, AND THE LOW-INCOME PROSPECTIVE BUYERS WILL SHOW UP IN DROVES!!!
Real Estate
The Boston Globe
Affordable, and empty
Some communities having trouble keeping lower-priced homes filled
Jeff and Lisa Spencer, with their children, Emily and Will, purchased their town house at Ipswich River Point three years ago as affordable housing.
By David Rattigan
Globe Correspondent / November 27, 2011
…
Simply put, some buyers can’t get loans, and many of those who can would rather stretch for a better deal in the open market.
“The slice of people who fit underneath the income cap but have enough money to borrow and can get the banks [to approve a mortgage] is becoming very narrow,’’ said Andrew DeFranza, executive director of Harborlight Community Partners, a Beverly-based nonprofit that serves southern Essex County affordable housing needs.
“It’s always been a small group, and this market has made that group incredibly small now, because they can buy something without a restriction for nearly the same money as a restricted unit.’’
He noted that five affordable condominiums - four in Gloucester and one in Wenham - are currently sitting without buyers. The Wenham unit, available for $157,000 on Friend Court, has been on the market for nearly a year.
“Because the real estate market is down so much, we’re in direct competition with market units for the same price. Therefore why would you take a unit with restrictions on appreciation and equity?’’ Molly Martins asked rhetorically. The chairwoman of the Wenham Board of Selectmen is also a member of the Wenham Housing Trust, which offered the unit for sale in late 2010.
…
Generation game: Homeowners are stuck in starter homes as their parents hog the housing stock
By Emily Allen and Steve Boggan
Last updated at 10:27 PM on 27th November 2011
Increasing numbers of homeowners are trapped in their first homes priced out of moving up the property ladder, research shows.
According to a report published by HSBC, as many as 360,000 buyers who bought their first homes in 2007 could be stuck in them for years to come.
This is due to the fact their properties have either not appreciated in value in the last four years or they are worth less than they paid for them.
For some, not being to trade up is having serious implications on what kind — and what size — of family they can have.
Charlotte and James Woodward with their children Tabitha, who and Annabel at their home in Cheltenham which they bought in 2006
Stuck: Charlotte and James Woodward with their children Tabitha and Annabel at their home in Cheltenham which they bought in 2006
In 2007, the average first-time buyer property cost £160,000, and required a 10 per cent deposit of £16,000. Since then, property prices in this bracket have fallen by an average £11,000.
The bank points out that buyers with a repayment mortgage, where the interest and principal sum borrowed are repaid on a monthly basis, would have paid back around £11,000 during this four year period — leaving them back exactly where they started in 2007, with £16,000 equity in their home.
…
Does anyone have a clue about the likely duration of this extraordinary period where political decisions completely override fundamental determinants of market value?
Europe bond yields to keep stocks spellbound
By Rodrigo Campos
NEW YORK | Sun Nov 27, 2011 3:48pm EST
(Reuters) - U.S. investors came to the Thanksgiving holiday table on Thursday mostly thankful that the week was a short one, or losses could have been larger.
As another round of news and bond auctions from Europe begins next week, traders will watch closely sovereign bond yields that have kept markets on edge.
Yields rose in almost every euro-zone country this week, and Germany failed to find enough bids for a 10-year auction. The S&P 500 reacted by posting a second straight week of declines and its worst week in two months.
Politicians are scrambling to find a way out of a two-year-old sovereign debt crisis in the euro zone and a visit to Washington from top European Union officials, as well as a meeting of euro-zone finance ministers, will provide the market with headlines and possibly add to uncertainty.
With the specter of rising yields, France, Britain, Italy, Belgium and Spain are holding debt sales next week. The direction of bond yields will determine the direction of equity markets.
“Politicians are trying to buy themselves time so austerity measures kick in and impact budgets and deficits and markets become more forgiving and rates come down,” said Wasif Latif, vice president of equity investments at the San Antonio, Texas-based USAA Investment Management, which manages about $45 billion.
“The credit market and fixed income are a little bit more in the eye of storm; that’s where the issue is rising, so equities are more reactionary,” he said. “You may continue to see more of the same.”
Investors have worried about rising borrowing costs in many euro-zone nations, but Italy, the third-largest euro zone economy, has grabbed most of the focus. On Friday Rome paid a record 6.5 percent to borrow for six months and almost 8 percent to issue two-year zero coupon bonds.
Many market participants have said that the sharply differentiated risk-on and -off trades that the euro zone crisis has generated has seen equities being sold as an asset class, with little or no difference between strong and week balance sheets and earnings reports. But a wedge has opened at least from a global perspective, as data show stocks of companies with more exposure to Europe are underperforming.
POLITICS TO DRIVE THE WEEK
President Barack Obama will meet on Monday with European Council President Herman van Rompuy and European Commission President Jose Manuel Barroso, and Europe’s response to the two-year sovereign debt crisis is expected to top the agenda.
“The only thing that will come out of that is speculation,” said Todd Salamone, vice president of research at Schaeffer’s Investment Research in Cincinnati, referring to the meeting in Washington.
“It will come down to the U.S. trying to convince European leaders to get something in place to solve this crisis.”
…
The ECB seems determined to chart a different course than the Fed took.
If the ECB leadership is smart, they will play mum until the Fed feels compelled to come to the rescue of Wall Street Megabanks which expected to profit from an ECB eurozone bailout.
Nov. 27, 2011, 11:56 a.m. EST
Stark: ECB’s independence under threat
By Tom Fairless
FRANKFURT (MarketWatch) — Politicians are endangering the European Central Bank’s independence by openly discussing an expansion of its mandate, ECB Executive Board member Juergen Stark said in an interview to be published Sunday.
“The political pressure on the ECB is currently enormous,” with “an expansion of our mandate openly discussed,” Stark told German newspaper Frankfurter Allgemeine Sonntagszeitung.
“That doesn’t just touch our independence; it endangers it,” he said.
The ECB’s mandate is to maintain euro-zone inflation at just below 2%. But politicians from a number of member states are increasingly urging the bank to print money and greatly expand its government bond purchases in an effort to end the bloc’s debt crisis.
ECB executives so far have resisted such demands. They have been supported by Germany, which traditionally has expected its central bank to focus on fighting inflation.
Stark warned that neither monetary financing nor the creation of common euro-zone bonds would solve the debt crisis.
Euro bonds “don’t at all solve the structural budgetary problems that some euro-zone member states face,” he said. “Rather, they lead to a liability and debt union that nobody can want.”
Meanwhile, “the central bank’s printing press will on no account be used to reduce government debt,” he said, reiterating the ECB’s line on monetary financing.
…
California demographic shift: More people leaving than moving in
More people are moving out of the state than are moving in. It’s the economy, of course, especially housing costs.
High housing prices–too high for many struggling Californians despite a burst housing bubble–have played a role in California’s population shift. (Anne Cusack / Los Angeles Times / November 26, 2011)
By Gale Holland and Sam Quinones, Los Angeles Times
November 27, 2011
For a clue to why California is losing its allure as a place to settle down, just ask Jennifer McCluer, who moved out of California in 2007 after she obtained her license in skin care.
Unable to afford Orange County’s sky-high rents, she opted for Portland, Ore. “A big motivator was that I lived with roommate after roommate after roommate,” said McCluer, 30. “Friends said you could probably live on your own up here. The rent was a huge deal for me.”
McCluer would like to move back, but it’s still too expensive. “It’s really difficult,” McCluer said. “I’ve given myself 11/2 to two years to save money.”
Recent census figures show the state is losing more Californians like McCluer than it is attracting from other parts of the U.S. And the trend toward out-migration is looking less like a blip than a long-term condition.
The proportion of Californians who had moved here from out of state reached a 100-year low of about 20% in 2010, and the decade measured by the most recent census was the first in a century in which the majority of Californians were native-born.
The demographics of California today more closely resemble those of 1900 than of 1950: It is a mostly home-grown population, whose future depends on the children of immigrants and their children, said William Frey, a demographer and senior fellow at the Brookings Institution.
“We used to say California, here we come,” said Frey. “That now has flipped.”
Experts point to various causes of the turnaround, most of them rooted in a flagging economy. But exorbitant housing prices — too high for many struggling Californians despite a burst housing bubble — still play a role.
“There’s a lot of concern about driving out working-class families,” said Hans Johnson of the Public Policy Institute of California.
It was a different world in the 1950s and ’60s, when roughly half of Californians were drawn from other states by jobs and by visions of crystalline blue skies in January and beach parties in September. The state’s shining image was burnished by a public relations machine that pushed attractive suburban real estate and a wide-open field for business.
As domestic immigration slowed between 1970 and 2000, foreign immigration filled in the gap. But since 2000, even the state’s once-growing immigrant population has been frozen at 27% of total residents. Since at least 2005, more residents have left California than arrived here from other states.
The outflow, driven by high housing prices before the bubble burst, slowed as the recession brought prices down, then ticked back up in 2010 as the job picture remained dim, census data show.
And there is no sign of the old luster returning. Migration all over the United States has slowed to a crawl in this recession, and the exodus from Mexico is diminishing because of border violence and U.S. job shortages. That means the state increasingly will have to rely on the people it produces to power the economy.
Some analysts see a dark future in the loss of the demographic dynamism that has been the state’s hallmark.
“A steady-state California is both a contradiction in terms and a recipe for decline,” said historian and author Mike Davis, who teaches writing at UC Riverside.
Davis said warehousing and other commerce in inland California produces relatively few jobs, while employment in Los Angeles County is increasingly concentrated in small, poorly capitalized service businesses that could collapse in a recession.
“This is a totally different world from the days when the aerospace industry was the big engine,” Davis said.
…
“For a clue to why California is losing its allure as a place to settle down, just ask Jennifer McCluer, who moved out of California in 2007 after she obtained her license in skin care.
…
Recent census figures show the state is losing more Californians like McCluer than it is attracting from other parts of the U.S.”
Is California running out of skin care specialists?
Good thing the FHA has those loan limits back up there at $729,750. Can’t imagine the golden state having affordable homes, even for doctors.
Jon Bruner, Forbes Staff
Data Driven
11/16/2011 @ 10:47AM
Migration in America: Reverse Flows to “Bubble Areas”
We asked four experts to comment on our interactive map of American migration. This essay is by William Frey, a demographer who is a senior fellow at the Brookings Institution, and appears in abridged form in the December 5, 2011 issue of Forbes Magazine. Find the other essays here.
The rollercoaster nature of migration in the last half decade is played out in bold relief with the flows shown here—pointing up some unanticipated consequences of boom-to-bust migration reversals.
At mid-decade, easy credit and low housing prices fueled high migration from “unaffordable” coastal California to “very affordable” Las Vegas and Phoenix in the West. In like manner, Orlando, Tampa and Atlanta provided low-cost magnets for migrants from the northeast megalopolis. These five Sunbelt destinations were among the fastest gainers of large metropolitan areas in 2004-2005.
But as the Forbes Map shows, main feeder flows to these “bubble year magnets” ground to a virtual halt with the mortgage meltdown, coupled with the Great Recession. Look at Phoenix (Maricopa County, Ariz.) for example. In 2005, it had inflows from all parts of the country but especially from southern and coastal California. This changed dramatically in 2009 with inflows from many counties in California, and much of the West “flipping” from in to out migration (from back to red on the map).
By 2009, inflows to Phoenix from many counties had reversed.
Similar “bubble to bust” year flow comparisons can be seen for Las Vegas. And in the southeast, similar flow shifts occurred back from Atlanta and Florida to counties in New York and the greater Northeast.
The latter reversals, of course, reflect the double whammy of depressed housing and job markets, which is shrinking migration rates to post-World War II lows. This is especially true for young adults and new college graduates who are living with their parents, delaying marriage, and essentially postponing their careers. These “nonmovers” are undergirding the smaller flows to the Sunbelt and providing windfall stayers for still-expensive areas like Los Angeles, New York, Boston and other areas which were spewing out migrants during the boom years. The point, shown clearly with the new Forbes maps, is that when the flows to boom areas are cut short, they have surprising positive consequences for other places—whose pervious migration losses unexpectedly turn to gains.
REVIEW & OUTLOOK
NOVEMBER 28, 2011
What Housing Risk?
The FHA says there’s nothing for taxpayers to worry about. Oh-oh.
Before the 2007 housing bust, financial analysts who raised questions about Fannie Mae and Freddie Mac’s shaky finances were dismissed as cranks. So it’s worrying to see a thoughtful critique of another taxpayer-backed monolith—the Federal Housing Administration—receive a similar brush-off.
The flap centers around an American Enterprise Institute paper “Is FHA the Next Housing Bubble?” by Wharton real-estate finance professor Joseph Gyourko earlier this month. Mr. Gyourko notes that while the FHA’s loan exposure has grown to more than $1 trillion this fiscal year from $305 billion at the end of 2007, the agency hasn’t “increased its capital reserves commensurately.” Sure enough, the Department of Housing and Urban Development recently reported that the FHA’s capital reserves are 0.24%, a far cry from the 2% statutory minimum.
If the FHA were a private entity, these revelations would alarm investors exposed to the risk and force management to adjust. But the FHA is a bureaucracy, so its instinct is the opposite. In a blog post titled “The Continued Strength of the FHA,” Assistant Secretary for Research and Policy Development Raphael Bostic dismisses Mr. Gyouko’s “outrageous claims” and says the FHA’s books are “sound.” His arguments are worth mulling for what they reveal about what passes for FHA thinking.
Mr. Bostic focuses on the FHA’s expansion and recent reforms. Although the agency expects “record” payouts next year as borrowers default, it forecasts $9 billion of new business over the same period. FHA credit scores have improved markedly: At the end of 2007, 47% of borrowers had a credit score of less than 620, but today that figure is 3.5% and the average credit score tops 700. The Obama Administration has increased FHA premiums three times, made “reforms to credit policy, risk management, lender enforcement, and consumer protections,” and “total liquid assets are at their highest point ever,” Mr. Bostic notes.
In other words, the FHA wants to grow its way out of its problems by shedding subprime borrowers and expanding into prime loans, an area historically served by private insurers. Mr. Bostic makes this argument explicit, arguing that the FHA’s market dominance—the agency now backs nearly one-third of all new single-family mortgages—is “essential” to a housing-market recovery, adding: “Providing access to credit for homebuyers of all income ranges and in all communities, and stabilizing our housing market, has been FHA’s mission for nearly eight decades.”
And here we thought its mission was to make housing affordable for lower-income earners. But if the FHA now wants to dominate America’s housing market with taxpayer monies, that’s even more reason to examine the risks, not ignore them.
…
2013 seems a tad optimistic to me as a forecasted time for real estate to start going up again, but then I am not an MSM-favored “real estate expert.”
Experts predict more U.S. home price declines
November 23, 2011 01:30PM
Just two months ago, economists figured nationwide housing prices would begin rising next year. A new poll by Reuters shows that that confidence was fleeting, as the group of 27 analysts surveyed last week predicted prices would remain flat, and only begin to recover in 2013.
The economists Reuters spoke with expect 2011 to finish with housing prices down 3.3 percent (as measured by the S&P/Case-Shiller home price index), and foresee an additional 0.3 percent decline in 2012, marking the bottom of the market. In 2013 they expect prices to increase by 1.5 percent.
The current excessive inventory coupled with more foreclosures coming through the pipeline were the main reasons economists felt prices would stagnate. And most economists polled were skeptical of the two main solutions being offered by policymakers and experts — the Fed purchasing more mortgage-backed securities and a reduction in loan principal for struggling homeowners. The government has already purchased more than $2 trillion in long-term securities in order to help keep interest rates at their current, historic lows, though low rates have so far done little to spur a price recovery.
“We see little prospect that any policy action will meaningfully impact the housing outlook over the next year,” said Sam Bullard, senior economist at Wells Fargo. “Unfortunately, a sustained improvement in housing will not likely get underway until the mountain of foreclosures is cleared and the price discovery process plays out.“
http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.
A fresh narrative of the financial crisis of 2007 to 2009 emerges from 29,000 pages of Fed documents obtained under the Freedom of Information Act and central bank records of more than 21,000 transactions. While Fed officials say that almost all of the loans were repaid and there have been no losses, details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.
Bailout announcements are very, very good for stock prices.
27 November 2011 Last updated at 22:01 ET
Asian shares up on speculation of IMF bailout for Italy
Investors looking at share prices Asian markets have seen huge volatility in wake of the European debt crisis
Asian shares rose on Monday on speculation that the International Monetary Fund (IMF) was preparing a bailout package for Italy.
The Nikkei 225 index rose 1.7%, South Korea’s Kospi gained 2% and Australia’s ASX 200 added 1.7%.
This was after Italian newspaper, La Stampa, reported that the IMF was preparing a 600bn euro ($794bn; £515bn) loan for Italy.
There have been concerns about Italy’s ability to pay back its debts.
“It is the speculation around Italy that is the key driver,” said Savanth Sebastian of CommSec.
…
http://www.independent.ie/business/european/europe-struggles-to-fund-our-bailout-2946859.html
Here’s another unraveling Eurozone bailout that Bennie and the Inkjets can print away, hyperinflation be damned.
Heh heh…even conspiracy theorists have to be right, occasionally…
Are Conspiracy Theorists Right about a New World Order?
By Abe Raymond
Benzinga Staff Writer
November 25, 2011 1:34 PM
Are conspiracy theorists actually right this time around? It appears that the European Financial Stability Facility is becoming more and more desperate. Over the last few weeks, investors across the globe have witnessed mounting debt issues across all the major European economies.
It started in Greece, and then spread to Italy and Spain. Recently, signs popped up in Germany that may signal trouble in the strongest of European countries. In an effort to contain the economic crisis, the EFSF has proposed a wide-scale bailout of the afflicted Eurozone nations.
However, the bailout strategy is particularly interesting. In 2008, the United States government decided to use $800 billion of taxpayers’ money to fund a full-fledged bailout of the financial system. This time around, in Europe, the bailout is expected to exceed $1.5 trillion. In order to finance the fund, officials have determined that leverage is necessary.
Using assets valued at about $700 billion, the EFSF hopes to find investors that will pitch in over $1 trillion, in order to round out the safety net for European countries. However, the EFSF has been unable to convince investors of the financial prudence in investing in Europe.
The pitches that the EFSF has been undertaking involved fixed income assets for individual countries. In an attempt to be able to actually meet the bailout fund’s needs, officials have been mulling over Eurozone bonds.
In fact, Angela Merkel of Germany recently stated that her office would be open to the idea of the bonds, given desirable specific terms. For the last several months, Merkel was fervently against the very idea. However, now that Europe appears to be pulling its last few strings, European bonds may become a reality.
And therein lies the conspiracy theorists’ worst nightmare. European bonds signifies one step closer to a New World Order. Given the tangential problems in the United States, what if “Western” bonds were created in a few years. Given the slowing growth in China, what if “World” bonds were created down the road? Eventually, we may have a world government that has supreme sovereignty and power over everyone.
…
Back to 1999 prices ? 12989 View Mesa St Moorpark, CA 93021
got about 200K to go
08/28/2011 Listed for sale $499,000
06/30/2011 Listing removed $599,000
04/13/2011 Listed for sale $599,000
12/07/2007 Sold $595,000 95.1% $336 Public Record
08/27/1999 Sold $305,000 — $172 Public Record
Bailouts and Austerity Measures Aren’t Working: Is This the Euro’s Last Stand?
By Michael Schuman Sunday, Nov. 27, 2011
Together apart Clockwise from top left: Draghi, Merkel, IMF head Christine Lagarde and French President Nicolas Sarkozy
Illustration by Oliver Munday for TIME
Who has time for pleasantries when the fate of Europe and the global economy is at stake? After Mario Monti, an economist with little experience in the rough world of Italian politics, was sworn in as the country’s new Prime Minister on Nov. 16, German Chancellor Angela Merkel sent him a congratulatory letter that minced no words. With Italy, the euro zone’s third largest economy, gripped in a debt crisis, Europe was counting on him to repair his country and save the euro from disaster. “There are many hopes and expectations set on you,” she wrote. “It would behoove you and your government to decide upon and implement decisive and significant reforms.”
Monti is committed to doing his best. On Nov. 17, he told Italy’s Senate he’d slice the national budget and introduce progrowth reforms. “We can’t be considered the weak link of Europe,” Monti warned. But even if Monti lives up to his nickname — Super Mario — the crisis roiling the euro zone has become far too big for Monti, or even Italy, to solve on their own. What Monti needs most of all wasn’t mentioned in Merkel’s letter — much greater cooperation among the members of the monetary union and significant changes to the euro zone. The only way to save the euro is to forge a renewed monetary union based on much deeper integration. “There is no way around it, if we want to avoid the euro breaking apart,” says Sigmar Gabriel, the chairman of Germany’s Social Democratic Party.
…
Bloomberg
Noyer Says European Crisis Has Worsened ‘Significantly’
November 27, 2011, 9:43 PM EST
More From Businessweek
By Aki Ito and Toru Fujioka
(Updates with Noyer comment in the second paragraph.)
Nov. 28 (Bloomberg) — Bank of France Governor Christian Noyer said the European crisis has worsened “significantly,” as deepening investor concern over the region bolsters market volatility.
“The situation in Europe and the world has significantly worsened over the past few weeks,” Noyer said at a forum in Tokyo today. “Bond markets in the euro areas are not functioning normally. Economies outside the euro area are feeling the effects of increased uncertainty, lower growth prospects and capital repatriation.”
More than $4 trillion has been wiped out from global equity values this month as concern Europe’s crisis will spread spurred a surge in Italian borrowing costs. Noyer said that despite the turmoil, confidence in the Euro is “as strong as ever” and signaled a reluctance to purchase more bonds to save indebted countries in the region.
…
The Financial Times Online
The Long View
November 27, 2011 3:50 am
Loss of confidence and conviction set to linger
By John Authers
How do you feel? It’s a simple question, but impossible to answer with precision, as it is wholly subjective. And yet no question is more important for gauging the future direction of markets.
Asset prices are set by swings in human emotion. If everyone is pessimistic, you will find it hard to sell your stock, no matter how cheap it is; but extremes of sentiment generally prefigure big snaps back.
For example, the long-running survey by the American Association of Individual Investors nailed the bottom of the last great bear market, with pessimism hitting an all-time high the very week in March 2009 when stocks started to rise.
Thus, much money is spent on surveying investor sentiment. But it is hard to separate the cyclical from the secular. Sometimes sentiment shifts in a new direction and stays there. These shifts underpin secular bull and bear markets, cycles that often run for decades. And there are different kinds of investors. US retail investors, big hedge fund managers and the asset allocators who run the biggest pension funds all have power, but they have very different incentives.
However, across the board, the evidence suggests that investors’ animal spirits have been damped and may take years to recover. Let us start with individual investors. In the 1990s, US retail investors’ “irrational exuberance” drove stocks to fresh heights. Every market break was a chance to “buy on the dips”. Official data show that US equity mutual funds survived 1997 and 1998, the years of the Asia crisis, with only one month of net outflows. Even after the dotcom bubble burst in March 2000, a year went by before equity funds suffered their first net outflows.
Their behaviour during this crisis could hardly be more different. Since early in 2008, they have pulled their money out of equities persistently. Subjective surveys suggest why.
When London’s Absolute Strategy Research polled US households earlier this year, only 36 per cent thought stocks had any role to play in saving for retirement. In the UK, only 21 per cent thought this was a good time to buy stocks, while 58 per cent refused to take any risk with their savings.
Two savage bear markets in a decade appear to have stripped retail investors of their faith. It would be wise to treat this as a secular shift; a generation’s worth of good news could be needed before spirits recover – and before investors start paying high prices for stocks again.
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Members of the Free $hit Army squating in vacant foreclosures.
Another good reason for banks to get them off their books (although the banksters, Fed, Treasury, and Republicrats will ensure the bankster liabilities are transferred to taxpayers, while the sheeple, placid as Hindu cows, give their sanction to the ripoff by continuing their mindless voting for the Republicrat status quo.
http://www.tcdailyplanet.net/article/2009/02/13/neighbors-helping-neighbors-break-vacant-houses.html
Poverty rights activists broke into at least a dozen vacant Minneapolis buildings this week and helped homeless families move in.
“This is the modern underground railroad,” said Cheri Honkala, National Organizer for the Poor People’s Economic Human Rights Campaign, the group organizing the “takeovers.”
This week’s actions are part of a growing national movement to illegally open up thousands of vacant, foreclosed homes to provide housing for the growing number of homeless people. Over 3,000 Minneapolis homes went into foreclosure in 2008. Advocates estimate that over 7,000 Minnesotans are homeless. Most Twin Cities’ homeless shelters have been filled to capacity for months.
“This is the modern underground railroad,” said Cheri Honkala, National Organizer for the Poor People’s Economic Human Rights Campaign, the group organizing the “takeovers.”
They can’t be serious…
America, meet your future. Which will be exactly what we, or more precisely the Obama Zombies and McCain Mutants, deserve.
http://www.dailymail.co.uk/news/article-2066527/Think-weve-got-bad-Read-British-expats-lives-nightmare-violent-chaotic-land.html
‘The Greek people I know realise they’re making it worse for themselves. Many are embarrassed about what’s happening. One of their biggest worries is that so many young people are leaving the country.’
But the rot continues. A friend whose official salary has been cut receives a cash-stuffed envelope each month, making up the difference. Our landlady complains about the corruption and then hands us a receipt for our rent with only half the amount written on it.
‘Every single Greek person I have met has taken advantage of the system here for years,’ says Sara. ‘Even if it was just passing an envelope of money to the hospital staff when their children were born to make sure they were looked after properly.
A friend whose official salary has been cut receives a cash-stuffed envelope each month, making up the difference. Our landlady complains about the corruption and then hands us a receipt for our rent with only half the amount written on it.
‘It’s just taken as part of life here. The philosophy is, if you don’t look after yourself, no one else will.’
At this day-to-day level, it is easy for us outsiders to understand how the Greeks have brought this awful mess upon themselves. As one embattled Greek tax collector said: ‘The Greek people never learned to pay their taxes because no one is ever punished.’
“One of their biggest worries is that so many young people are leaving the country.”
Unless our young college graduates find real career jobs soon us older peeps can forget about our retirement investments. The F* ‘em method won’t work.
“The Greek people never learned to pay their taxes because no one is ever punished.”
I think this is a pretty good analogy for how we got the political and financial system we have today - because no one was ever punished for it. In fact, they were rewarded.
I will venture a wild guess that lots larger price cuts are on the way before this property changes hands.
California Wine Estate Reduced to $20 Million
Nov. 25, 2011
Willis Johnson, founder and chairman of auto-parts auction company Copart, has cut the price on his Suisun Valley, Calif., estate to just under $20 million from an original listing price of $22 million. John Edwards has details on The News Hub.
“Comment by Ben Jones
2011-11-27 07:56:11
Bombast gets attention and is even a little fun. But when it comes to changing peoples minds, the public is numb to it now. Plus when held up to scrutiny, it makes the speaker look silly.”
Totally agreed. Case in point:
The Financial Times Online
November 27, 2011 7:38 pm
The eurozone really has only days to avoid collapse
By Wolfgang Münchau
In virtually all the debates about the eurozone I have been engaged in, someone usually makes the point that it is only when things get bad enough, the politicians finally act – eurobond, debt monetisation, quantitative easing, whatever. I am not so sure. The argument ignores the problem of acute collective action.
Last week, the crisis reached a new qualitative stage. With the spectacular flop of the German bond auction and the alarming rise in short-term rates in Spain and Italy, the government bond market across the eurozone has ceased to function.
The banking sector, too, is broken. Important parts of the eurozone economy are cut off from credit. The eurozone is now subject to a run by global investors, and a quiet bank run among its citizens.
This massive erosion of trust has also destroyed the main plank of the rescue strategy. The European Financial Stability Facility derives its firepower from the guarantees of its shareholders. As the crisis has spread to France, Belgium, the Netherlands and Austria, the EFSF itself is affected by the contagious spread of the disease. Unless something very drastic happens, the eurozone could break up very soon.
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