Weekend Topic Suggestions
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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How about discussing truth about the entrenched power structures who invoke lies and use any other means possible to keep us enslaved?
Can anything or anyone be trusted anymore? How about me? Or Jonesy? Or Sammy? How do I know Sammy or Jonesy aren’t paid hacks? Do you think Giethner was telling the truth in 2006 per Sammy’s post in todays bucket?
RAL, I can pretty much verify that Sammy isn’t a paid hack. Although donations in my name to Ben and the HBB would be gratefully acknowledged.
One topic could be truth in information. In light of the Fed minutes recently released, we know that what is said behind closed doors isn’t what we hear at the time. Why for instance, are we told we’re in a recovery when at the same time incomes have fallen and unemployment is so high? The never ending BS we’re given about shadow inventory?
I’d go beyond truth in information to simple honor and integrity in both high places and among the populace as a whole. When a society no longer values or practices such thing, it’s decline and rot is a foregone conclusion. Government agencies and CEOs alike seem far more interested in “perception managment” than telling the truth, and our corporate-owned MSM isn’t about to call them out on it.
simple honor and integrity in both high places and among the populace as a whole. When a society no longer values or practices such thing,
When was this golden period of corporate, government, and individual decency? When we had slaves? When the robber barons looted our country like Russian oligarchs? During the roaring, partying 20s?
Or is this golden period that conservatives and libertarians often refer longingly to really the latter half of the 20th century- the Ozzie and Harriet/Eisenhower years?
AKA the period of FDR’s New Deal, and Keynesian take-care-of -the-middle-class policies?
Let’s face it. Those were the Golden Years. Why is it absurd to think the policies and politics of the time had nothing to do with the integrity of the institutions and people of the same time?
So by that rationale, alpha-sloth, honor and integrity should give way to situational ethics, with whatever benefits me being justified and appropriate regardless of the adverse impact on others. I see. The perfect Boomer ethos.
What does situational ethics have to do with pointing out that the period when the government followed liberal, progressive policies was also the ‘Golden Period’ of personal and institutional ethics?
whatever benefits me being justified and appropriate regardless of the adverse impact on others
That is the exact opposite of liberal thought, but a pretty good description of libertarian thought.
I don’t consider myself a Libertarian, as sound regulation like Glass-Stegal is necessary to protect the general public against the predatory proclivities of the new robber barons on Wall Street.
And the partisan idiocy and hot button buzzwords don’t help either.
as sound regulation like Glass-Stegal is necessary to protect the general public against the predatory proclivities of the new robber barons on Wall Street.
You don’t sound like much of a Ron Paul supporter either. What’s his position on Glass Steagall, BTW?
Ron Paul voted against Glass Steagall, a position I strongly disagreed with. That doesn’t make me any less of a RP supporter, since he’s the only candidate in the race who has made ending the Fed - a cancer on our economy and society - a centerpiece of his campaign.
Ron Paul voted against Glass Steagall
Alrighty then.
Ron Paul voted against Glass Steagall
Alrighty then.
If I think Ron Paul has a shot at 10% of the vote or more, I will vote for him. I’m Fed Up.
I’m gonna vote for him whether I think he’ll win or not. Mostly because I don’t think much of anyone else and because I think there are a lot of us in this boat. Maybe enough to push him over if we weren’t so worried about “wasting” our vote. Really, just who could be 2nd choice after considering Paul first?
For me, it’s voting for truth vs the corporate controlled version. Who else out there stands for truth?
If the “contest” is between Romney and Obama, it matters not who wins. A PAC called “Plutocrats for Romney” might be unsubtle but it would accurately reflect who is backing his campaign - just as they backed “Change Goldman Sachs Can Believe In” during Obama’s ‘08 run. I’ll gladly “waste” my vote on Ron Paul, Gary Johnson, or Flash (my dog, a write-in candidate) rather than join the sheeple who give the Republicrat duopoly a mandate for unfettered Wall Street looting of the productive economy and imposing debt slavery on our children.
http://www.opensecrets.org/pres12/contrib.php?id=N00000286
Ron Paul voted against Glass Steagall,
What does this mean? Glass Steagall was the Banking Act of 1933.
Do you mean he voted FOR The Gramm–Leach–Bliley Act which overturned many provisions of Glass Steagall?
Yeah if he voted against Gramm then he’s all right in my book.
Or else, maybe he’s older than I thought.
“If the “contest” is between Romney and Obama, it matters not who wins.”
Did everyone hear that?
Gramm-Leach-Bliley Act
http://www.govtrack.us/congress/bill.xpd?bill=s106-900
“Jul 20, 1999: This bill passed in the House of Representatives without objection. A record of each representative’s position was not kept.”
“Nov 4, 1999: After passing both the Senate and House, a conference committee is created to work out differences between the Senate and House versions of the bill. A conference report resolving those differences passed in the House of Representatives, paving the way for enactment of the bill, by roll call vote. The totals were 362 Ayes, 57 Nays, 15 Present/Not Voting.”
House Vote on Conference Report: S. 900 [106th]: Gramm-Leach-Bliley Act
http://www.govtrack.us/congress/vote.xpd?vote=h1999-570
“Not Voting TX-14 Paul, Ronald [R]”
So the official records indicate that Ron Paul either didn’t vote on it, or his vote was not recorded by procedure, or he didn’t raise a recorded objection.
I heard it.
I also will vote for Flash, or Paul, or anyone who does not walk, talk and smell like a duck. I’m all ducked up to here. Paul will not be on the R ticket, pretty sure. I could be wrong and happy.
IMO, it is too early in the cycle for a real hero to win this year’s election. There hasn’t been enough pain to pull most people out of their sound byte televised stupor. I could hope that 10% of the voting population does a write-in.
I could hope that a third party rises and is inclusive of all the nuts (like me) who want some central things in common and are not so easily led by the voices of authority anymore. I don’t expect the next president will “win” with a popular majority.
“Not Voting TX-14 Paul, Ronald [R]”
He says he was against Gramm Leach, but he’s also ‘against’ Glass Steagall, because the banking system shouldn’t be regulated, government shouldn’t be involved with banks at all, yadda, yadda…
Well, when you’re against the Fed, also being against regulation of banks via such things as Glass Steagall makes more sense than you realize.
End the Fed and banks have to realize more of their own losses, and potentially go out of business (like any business). If banks want to get involved with insurance and all else, let ‘em. Let consumers put their money in them, too, if they so choose.
If later the banks go out of business and said customers lose their deposits, so be it.
The problem with ending the Fed is the potential for Congress to determine policy. Imagine the possible outcomes of that.
If later the banks go out of business and said customers lose their deposits, so be it.
We tried that already, and it sucked. It gets old going to the bank, and discovering your savings are all gone.
The problem with ending the Fed is the potential for Congress to determine policy.
I’ve pointed that out myself on occasion.
We tried that already, and it sucked. It gets old going to the bank, and discovering your savings are all gone.
My aunt and her mother (my maternal grandmother) were out running errands one day. They went to the town bank and found it locked up tight. Never reopened.
To this day, my aunt has no idea whether her parents lost a substantial amount of money at that bank. They never said anything to any of us. This kid suspects that Grandma and Grandpa really lost a bundle.
The problem with ending the Fed is the potential for Congress to determine policy. Imagine the possible outcomes of that.
At least you get to vote for them…and even if that does no good at least you know who they are and where they live.
“1984″ draws closer every day of this Administration.
http://klein.wp.wnd.com/2012/01/12/obama-czar-proposed/
Just prior to his appointment as President Obama’s so-called regulatory czar, Cass Sunstein wrote a lengthy academic paper suggesting the government should “infiltrate” social network websites, chat rooms and message boards.
Such “cognitive infiltration,” Sunstein argued, should be used to enforce a U.S. government ban on “conspiracy theorizing.”
Among the beliefs Sunstein classified as a “conspiracy theory” is advocating that the theory of global warming is a deliberate fraud.
The find comes as a government document reportedly relates the U.S. Department of Homeland Security’s command center routinely monitors dozens of popular websites, including Facebook, Twitter, Hulu, WikiLeaks and news sites including the Huffington Post and Drudge Report.
Reuters reported that a “privacy compliance review” issued by DHS last November confirms that since at least June 2010, the department’s national operations center has been operating a “Social Networking/Media Capability” which involves regular monitoring of “publicly available online forums, blogs, public websites and message boards.”
The government document states such monitoring is meant to “collect information used in providing situational awareness and establishing a common operating picture” to help manage national or international emergency events.
While the DHS may be monitoring websites for security reasons, Sunstein advocated such actions with another goal in mind.
Sunstein’s official title is Administrator of the White House Office of Information and Regulatory Affairs.
Sounds like the Ministry of Truth.
Oh, and manufacturers assemble, while realtors dissemble.
I expect everyone to talk about Palm Beach County all weekend.
I`m going to hide now.
In their most recent edition, The Economist’s Schumpeter blog published an apology for the pirates who have overthrown any semblance of law in the international banking system. Such propaganda might seem a bit puzzling, until you realize how many Rothschilds are among The Economist’s owners.
The comments to follow far outweigh the content of the article.
Schumpeter
The dangers of demonology
Hatred of bankers is one of the world’s oldest and most dangerous prejudices
Jan 7th 2012 | from the print edition
HURLING brickbats at bankers is a popular pastime. The “Occupy Wall Street” movement and its various offshoots complain that a malign 1%, many of them bankers, are ripping off the virtuous 99%. Hollywood has vilified financiers in “Wall Street”, “Wall Street 2”, “Too Big to Fail” and “Margin Call”. Mountains of books make the same point without using Michael Douglas.
Anger is understandable. The financial crisis of 2007-08 has produced the deepest recession since the 1930s. Most of the financiers at the heart of it have got off scot-free. The biggest banks are bigger than ever. Bonuses are flowing once again. The old saw about bankers—that they believe in capitalism when it comes to pocketing the profits and socialism when it comes to paying for the losses—is too true for comfort.
But is the backlash in danger of going too far? Could fair criticism warp into ugly prejudice? And could ugly prejudice produce prosperity-destroying policies? A glance at history suggests that we should be nervous.
…
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Jan 7th 2012
Readers’ comments
The Economist welcomes your views. Please stay on topic and be respectful of other readers. Review our comments policy.
Add a comment (up to 5,000 characters):
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New Conservative Jan 5th 2012 17:15 GMT
This is a terrible article.
It tries to tuck away the important part, “most people have gotten off scot free” and instead of examining why they got off scot free it says that people should give the finance industry the benefit of the doubt because it might turn into racism.
(Which is ridiculous because modern finance is a fairly cosmopolitan affair. It isn’t dominated by one ethnic group. Someone trying to be racist against bankers would find, once they’ve checked off all the nationalities on the boards of big financial firms, that the only people not involved in international banking are from Bhutan and Lesotho.)
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Connect The Dots Jan 5th 2012 18:30 GMT
Since the Great Depression, The Glass-Steagall Act had remarkably upheld banking stability, honesty and prevented bank failures.
In 1999 the Gramm–Leach–Bliley Act single-handedly reversed this Act and introduced uncertainty, failure and investment gambling of banks that we have witnessed in the past decade. Casinos are safer investment than Wall Street banks.
The Gramm Bill may be the single most important cause of the the Financial Collapse and Recession.
Repeal the Gramm–Leach–Bliley Act! Reinstate the Glass-Steagall Act. We know it worked.
We need to return to Post War stability that was taken for granted.
Sometimes the Future is not as promising as the Past.
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Canuk Jan 5th 2012 18:38 GMT
I think we need to be clear about who we are demonizing.
Banking / finance in the rest of the world, apart from the UK / US does indeed , on balance, support all levels of civil society in their political economies.
Germany is a classical example of this approach with KFW in Frankfurt leading the financial support for industry and the 700 odd local banks with their own decision makers on the spot so to speak supporting all levels of their local civil society and businesses.
This “financial” approach surely has made a significant contribution to the success of Germanys post war universal political economy and social cohesion and has to be admired.
Compare that outcome to the way Banks / finance has operated in the UK / US led by Washington, Wall St and London and one almost has to cry at the way these banksters have defrauded their own civil societies over the last two decades or so, and sure this “scum” deserve to be demonized by all of us that have a fairly good understanding of how the global political economy really works.
It is absolutely appalling how we have allowed these fundamental morally currupt UK / US banksters to decimate wide swathes of civil society in their countries to simply line their own pockets,and in so doing, creating enough wealth to “bribe” all other levels of the governing elites of these two countries to allow them to continue unhindered in their desire for power.
For those of us who have no power, and completely sickened by the currupt role these banksters play in our society over the last decade or two, all we can hope by our “demonizing” this scum is that others with political and street power will find ways to bring this crowd down for good in the UK / US for the future of our younger members of civil society and indeed, a more cohesive society.
With apologies for the tone of my comment here but from starting in 1955 in the City, and having to watch for the past 50 years or so the decimating of wide swathes of UK civil society outside of the London and South East, just to save the role of sterling initially and now the so called “City” makes me deeply ashamed to be English and would hope the same would apply to the journalists of the Economist and the FT (reading and subscribing to both for over 40 years now), but unfortunately I am not holding my breath.
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Dwrig Jan 5th 2012 20:28 GMT
Where does personal responsibility stand in all of this?
The brokers were blamed for the dot.com bubble, now the bankers for the housing bubble and subsequent fall out. Who was buying shares in those start ups or taking on ever bigger mortagages (and borrowing even more against the ‘increase’ in the value of the property)?
Didn’t hear too many complaints about brokers when the NASDAQ was racing away or of bankers when house prices kept going up!
Hypocritical to point the finger now. I find most Americans and Brits a lot like Greeks, you’ve just been living way beyond your means for far too long and now the chickens have come home to roost. Don’t blame someone else for your poor judgement!
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Stephen Morris Jan 5th 2012 23:16 GMT
Please do not insult the intelligence of your readers.
Rhetorically, this article is a rather clumsy attempt at a “ parade of horribles”.
It is acknowledged (at the very end) that:
The crisis of 2008 showed that global finance requires tough medicine. Banks must be forced to hold bigger reserves. “Weapons of mass destruction” must be defused. The culture of short-term incentives needs to be revised.
However, any actual attempts at reform are likened to the complete abolition of banking and a return to Middle Ages!
This type of clumsy propaganda has no place in intelligent debate.
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Steven Spadijer Jan 6th 2012 1:26 GMT
What does the GFC crisis have in common with the Asian Financial Crisis?
My goodness. Both were preceded by outrageous rent-seeking activities in the real estate market, resulting in a gross mis-allocation of capital as overpriced land values attracted all the available capital in the economy. That, I humbly submit, is the problem we must address.
Does this mean we should blame bankers? Yes and no.
“No” because it is the fault of the state for failing to tax land (and thus deter land speculation) so bankers would not lend on real estate to begin with (unless its on real material improvements ON the land).
“Yes” because credit is the life blood to rising real estate values, and the bankers are merely playing the game which these perverse incentives rules our taxation system creates. In fact, we are all to blame because we have all become rentiers.
Ps The article claims Banks must be forced to hold bigger reserves
Erm, bank lending is not reserve constrained. The money supply is endogenous. Schumpeter (the person this blog is named after) got this point. Pity, the present author overlooked this point.
Reader comments in response to corporatist MSM articles are far more informative and revealing than the drek contained in most of these Ministry of Truth press releases.
+1000
I seriously doubt that if a rule of law were enforced in the international banking system, including long prison terms for those who stole untold millions, billions or even trillions through illegal banking scams, then the OWS movement would pretty much disappear overnight.
The biggest problem isn’t the illegal acts, though there are enough of those. The problem is that most of what they did wasn’t illegal. And the real problem is that most of what they did was profitable. If enough risk had been retained by the people who collected most of the profits, they might have hesitated to get that risky.
By the way, I suggest checking out Krugman’s blog on the NYTimes today. His ire at the Fed notes is notable:
“Two puzzling things: first, the housing bubble was the clearest thing I’ve ever seen in my professional life. How could they ignore even the possibility of a severe bust?”
Yeah, the bubble was obvious to readers here. As was the fact that a “soft landing” was very unlikely. Admittedly, the fact that the bursting housing bubble would bring down the rest of the economy wasn’t as obvious, but you’d expect those with access to better data and the supposed brains to examine them just might have been able to figure it out. At some level, “cheerleader to the economy” is part of the job description, but you’d hope that they had a clue. Instead they were busy believing their own accolates and spraining their arms patting each other on the back.
Is it perhaps really true that “Nobody could have seen it coming”? It isn’t as though an army of gadflies didn’t try to warn the Fed about where things were headed.
Transcripts show Fed slow to see fallout from housing bust
By Martin Crutsinger, Associated Press
Updated 29m ago
WASHINGTON – Ben Bernanke presided over his first meeting as Federal Reserve chairman in March 2006 believing the nation’s economy could pull off a “soft landing” from falling home prices.
Three months later, Bernanke had begun to grasp that he and others had underestimated the risk housing posed to the economy.
Newly released transcripts of Fed meetings during Bernanke’s first year as chairman show that, among Fed officials, he often expressed the most concern about housing. But no official, according to the transcripts, recognized the extent of the damage a housing bubble would cause. A year later, the housing market’s collapse helped send the nation into its worst recession since the Great Depression.
In September 2006, Treasury Secretary Timothy Geithner, then a Fed official, expressed confidence that “collateral damage” from housing could be avoided.
…
As long as the banksters have limitless QE to ward off a financial reckoning day for their fraud, hubris and avarice, Timmay’s assertion that collateral damage (for his bankster accomplices) can be averted is largely true. As far as taxpayers, savers, and our children, that’s another story entirely.
This to me is the saddest part of the whole story. When the bust is finally allowed to run its course, most in the populace will be unable to connect the dots. Due to the time lag in reaction to the original actions that brought us here, the current President, Congress, business and civic leaders at that point in time will be blamed and probably demonized. Some maybe even physically threatened as the true architects of this mess slink away scott-free to some Brazilian ranch to ride out any visceral reaction.
“Due to the time lag in reaction to the original actions that brought us here, the current President, Congress, business and civic leaders at that point in time will be blamed and probably demonized.”
That is the game. Since you are from NY, note that we have not yet begun to pay for the retroactive public employee pension enhancements of 2000. Neither the unions nor the state legislature want any connection between that deal and rising taxes/service cuts.
Moreover, many CEOs who leveraged up in the 1990s were lionized, whereas those dealing with the fallout ever since are considered failures who are overpaid. The reality is they were overpaid in the 1990s, too.
I think you are right CarrieAnn, except that we are in busting mode and those in office are very reluctant to shatter the illusion. It’s a choice between villified now and revered later or celebrated now and villified later.
Our last President impulsively said “This sukker’s going down” and then his lips were sewn shut. Most people wanted to believe that the nasty bailouts would really save our sorry behinds. Isn’t working out that way. The Pres we have now just smiles and reads from the promtor. I was hoping he would go all JFK. Hasn’t happened.
This WSJ article certainly makes it sound as though the Masters of the Universe at the Fed were largely clueless about the ginormous housing bubble that had inflated right under their noses to ginormous proportions by 2006.
January 12, 2012, 12:36 PM
Fed 2006 Transcript Highlights: Riding Housing Roller Coaster With Eyes Shut
By Luca Di Leo, Jon Hilsenrath and Michael S. Derby
Federal Reserve Chairman Ben Bernanke and most of his colleagues showed little concern when house prices started to decline in 2006, predicting “a soft landing” in the then-strong U.S. economy, transcripts from the central bank released Thursday show.
Bernanke, who took over from Alan Greenspan as Fed chairman in February 2006, is cautious in making forecasts about housing and the wider economy. But, together with then New York Fed chief Timothy Geither, he believes the slowdown in housing is healthy and likely to end well.
Few central bank officials look overly worried just a few months before the storm hit, leading to the worst recession since the Great Depression. There are exceptions, however. At the May 2006 meeting, for example, Fed Governor Susan Bies brings the discussion back to housing and her growing worries about mortgages. At the following meeting in June, Janet Yellen, the Fed vice chairwoman who headed the San Francisco Fed in 2006, appears to be the most concerned about housing.
The transcripts, available on the Fed’s website, provide full details of Fed officials’ individual views during the eight Federal Open Market Committee Meetings, with the traditional five-year lag (the minutes, released three weeks after FOMC meetings, only give a summary.)
Highlights of the transcripts include:
JAN. 31: Alan Greenspan, who took over as Fed chairman in 1987, is chief for the last time during the meeting of the Fed’s decision-making body. Fed officials spend much of their time praising him. “I’d like the record to show that I think you’re pretty terrific, too,” says Timothy Geithner. “And thinking in terms of probabilities, I think the risk that we decide in the future that you’re even better than we think is higher than the alternative.”
MAR. 27-28: In Bernanke’s first meeting as Fed chairman, housing looms as a risk, but officials haven’t grasped the severity of the threat. The Fed’s chief economist, David Stockton, offers some ominous warnings. “Right now, it feels a bit like riding a roller coaster with one’s eyes shut,” when discussing his forecast for a modest slowdown in housing. “We sense that we’re going over the top, but we just don’t know what lies below.” Later, he notes that housing is “the most salient risk” to the economy. “I just don’t know how to forecast those prices,” he says of housing prices.
“Again, I think we are unlikely to see growth being derailed by the housing market, but I do want us to be prepared for some quarter-to-quarter fluctuations,” Bernanke says. He identifies housing as a crucial issue, but adds that he agrees “with most of the commentary that the strong fundamentals support a relatively soft landing in housing.
Timothy Geithner, who is now Treasury Secretary and was then president of the Federal Reserve Bank of New York, doesn’t see the parallel risks building in the financial system. “Equity prices and credit spreads suggest considerable confidence in the prospect for growth,” he says. “Overall financial conditions seem pretty supportive of the expansion.”
…
The very fact that Bernanke was paraded around as an expert on the Great Depression, just before the collapse tells you they knew everything. The fact that Hank Paulson took the job as treasury secretary so he could cash out at the top tax free saving 200 million dollars so he could move into treasuries just before the crash tells you they knew everything that was coming. One look at where they invested would tell you if they knew what was coming. Let’s see who was invested in Henry Paulson’s Hedge Fund.
+1
“…
HenryJohn Paulson’s…”You are confusing banksters with hedgies…
http://www.youtube.com/watch?v=GCi_PIz5ekU
Not to be confused with Robert Paulson, aka Meat Loaf.
I wish we could release the HBB transcripts from 2006 on the MSM “news” programs. It’s all right there in Ben’s blog for all to see, documented until the web burns out.
Everybody and their Shitzu knew the gig was up, but not Geithner, Bernanke, Summers, Rubin, Paulson, Yun, et al. Right.
http://market-ticker.org/akcs-www?post=200503
Bill to make robo-signing (for fraudclosures) a felony moving forward in Washington State. It’s about time.
I have been speculating on the economic effects of baby-boomer retirement. Of course as that cohort goes from putting money into the stock market to save for retirement to taking money out to pay for it we’re likely to see a crash in equity prices at some point. ISTM that the only think keeping stock prices at the current high multiples of dividends is anticipation of future price increases. And I for one believe that those price increases have been driven mainly by ever more money going to Wall Street bidding up those prices and making future dividends ever more expensive.
But at the same time, I think that we’re likely to start seeing an uptick in consumer prices, because that money being removed from Wall Street is going to be spent. More money chasing goods implies higher prices for those goods. So a collapse in equities at the same time as persistent high rates of inflation will really put the Fed in a pickle interest rate-wise. Of course money comming home from Wall Street will have a bit of a stimulative effect on the economy.
Your second paragraph assumes that people taking money out of their savings to live on in retirement are going to be spending more. That does not necessarily follow. It would if you were dealing with people who had plenty saved for retirement to replace their pre-retirement income, but that isn’t very common. Most people are going to need to pull back to live off savings. If they aren’t going to be able to retire at all.
Of course you’re right. Although if the fed is pumping as hard as it can to reflate asset prices, could the fact that a greater percentage of the money supply is going into people’s pockets rather than Wall Street have an inflationary effect?
If it is Wall Street speculation that is causing the asset prices to rise, then no, though I sure hope that not many people are playing games in the commodities markets as they reach retirement. That is a game for people who can afford to lose.
I’m also wondering about the traditional idea that you need only 80% or 70% of your pre-retirement income after you retire. What were the underlying assumptions of those numbers? They could have included any of the following:
House paid for
Kids out of the house so get rid of the big one and buy a smaller one, pocketing the tax free gains (that was the one-time gains exception if you are over 50 or thereabouts that applied before the “every two years” one was implemented)
Kids done with college and living as independent adults
No need to buy and maintain office clothes anymore
No need to eat out for lunch to maintain business relationships
Downsize to one car from two cars for a couple
and many more….
So, how many of those apply now? Some people are finding it hard to get out of the big house because they aren’t finished paying for it. They still have mortgages. The kids are not necessarily self-supporting yet. A lot of folks got to dump office clothes for office casual a long time ago. I think folks are going to find it challenging to live on less if they can’t dump a high income/expense location for a less expensive one. Medical care can be less expensive overall, if you trade individual health insurance for Medicare Advantage, but even Medicare is more expensive than having your employer cover most of your group plan premiums. And even with part D, drugs aren’t cheap if you take medications that aren’t available in generics.
I’m also wondering about the traditional idea that you need only 80% or 70% of your pre-retirement income after you retire. What were the underlying assumptions of those numbers? They could have included any of the following:
One more possible assumption: you were saving 20% to 30% of your income for retirement while you were working. After retirement, you no longer need to do that. So if you keep your spending level the same but don’t save anymore, your income requirement drops to the indicated 80% or 70%. Probably a reasonable assumption for higher-income households who can afford to save at these levels. Not so much for lower-income folks.
Your second paragraph assumes that people taking money out of their savings to live on in retirement are going to be spending more. That does not necessarily follow.”
average 401K is about 60K ? Based on this the future looks deflationary to me.
Question how will government continue to grow with deflation ? After all its promised so much to so many. It does this in part based on future growth.
Inflation could come if money is given out that can’t be backed by promises of future work. Or in other words the debt grows so big no sane investor will buy it knowing it’s impossible to pay back.
So the stock market , gold etc rise in anticipation of this.
Or the government backs out on its promises ( entitlements) and its deflation.
which will it be ?
ROME (AP) — Europe’s ability to fight off its debt crisis was again thrown into doubt Friday when the euro hit its lowest level in over a year and borrowing costs rose on expectations that the debt of several countries would be downgraded by rating agency Standard & Poor’s.”
spend too much money and look what happens
“Of course as that cohort goes from putting money into the stock market to save for retirement to taking money out to pay for it we’re likely to see a crash in equity prices at some point.”
I suspect this is the reason the Republicans are pushing to privatize SS. There is a big pot of money held in SS for the under-55 set. If they can get it out of SS, a good chunk of it will flow into stocks and assets (like housing).
as that cohort goes from putting money into the stock market to save for retirement to taking money out to pay for it we’re likely to see a crash in equity prices
Unlike a house in Peoria, the market for stocks is worldwide, so it’s not like the Boomers are limited to selling their stocks only to American Gen Xers.
A Public Policy Polling survey released Tuesday found that Colbert is polling ahead of former Utah Gov. Jon Huntsman in South Carolina. According to the survey, Colbert has 5 percent of the vote and Huntsman has 4 percent.
I think Colbert get’s my vote if he runs as an independent.
The bit last night about how he planned to separate the operations of his superpac from himself so there wasn’t any coordination was incredible. That is how comedy can educate.
Colbert reminds me of Pat Paulsen for President. Remember Pat?
I went to a Pat Paulsen campaign event in Pittsburgh in 1968. He was great.
Paulson announced his Presidential run at our high school as part of a comedy routine he performed there in 1967. Apparently it went over so well, he took it national on his Smother’s Brother’s Comedy Hour gig and actually got a fair polling in the 1968 primary run ups. So did the “Vote ‘NO’ on President” campaign, IIRC.
Colbert has taken it a step further with his superPAC, (”Building a Better Tomorrow, Tomorrow,”) as Polly has noted, using the “Colbert Nation’s” participation as a teaching tool to encourage civic responsibility. I would seriously vote for him, if for no other reason than as thanks for his Gonads o’ Titanium speech excoriating the National Press Club for their craven fecklessness during the GW Bush administration. The man is a National Treasure.
This one was emailed in:
May I suggest a topic just on NYC, as houses are not selling because sellers are not lowering their prices and NYS is not letting foreclosures go through fast enough.
For the benefit of the reader, take a look at Wells Fargo REO in NYC. The listings for all 5 boroughs exploded in the last 6 months. I’d wager to say that 90% or more of Wells REO in NY is in NYC. At least that’s what they’re making public.
BTW: Not letting “foreclosures go forward fast enough” is a way of giving hundreds of millions of dollars in tax-free money (in the form of free rent) to the “99%”. And are they grateful?
Either you’re a Iying reaItor or a nut. Which is it?
Well we’re clearly not grateful if you’ve read here for even 1 week so what’s your point except trolling?
Someone is buying houses in my neighborhood for far more than I could have paid. We’re talking $1 million for a 1915-built rowhouse with no off-street parking, 16 or 17 feet wide, about 1500 square feet or 2300 if the basement is semi-finished, 30-foot-deep rear yard.
There is a BMW wagon parked on the block now. Young couple. Seem nice enough. She stays home. Nor sure what he does. Another young couple is from London. I believe both work in finance. I met a young woman who is head of a non-profit.
Back when we bought in ‘94, all the young couples were civil servants and small business owners. Teacher, firefighter, agency manager, deli owner, parochial school teacher, librarian, that sort of thing.
I’m not sure if the partial deflation of Wall St. employment and pay expected soon will have any effect. But it is hard to disentagle the shift in relative desirability between transit connected places like the one I live in vs. auto-dependent suburbs compared with the housing bubble and bust. My neighborhood is more desirable, but it isn’t Manhattan for crying out loud.
Is the Fed’s White Paper proposal to use taxpayer-funded GSE losses to revitalize the housing markets merely a ploy intended to further enrich Goldman Sachs? Massive injections of printing press money could work wonders to revitalize the value of shitty mortgage assets.
MARKETS
JANUARY 13, 2012
Goldman Bids for Bad Bonds
Offer to N.Y. Fed For AIG’s Debt Rattles Market
By SERENA NG, AL YOON and LIZ RAPPAPORT
Goldman Sachs Group Inc. recently approached the Federal Reserve Bank of New York and offered to buy a multibillion-dollar bundle of risky mortgage bonds that the Fed acquired in the 2008 bailout of American International Group Inc., according to people familiar with the matter.
The New York Fed responded by quietly canvassing a few securities dealers for bids on the bonds Goldman wanted to purchase, seeking competing offers to determine whether Goldman’s offer represented the best value for the bonds, the people said.
But the effort, intended to be discreet, rattled the market for subprime-mortgage debt on Thursday when some market participants learned the New York Fed was considering additional sales of bonds from the portfolio known as Maiden Lane II. An index that tracks prices of subprime-mortgage bonds fell 2% on Thursday afternoon to about 47 cents on the dollar. The index had risen nearly 10% earlier this month.
The bonds that Goldman sought to buy represented roughly a third of a mortgage portfolio with an unpaid principal balance of almost $20 billion, the people said. It couldn’t be determined how much Goldman offered, but the bonds in Maiden Lane II had an average fair value of roughly 47 cents on the dollar at the end of September, suggesting Goldman could have been willing to pay about $3 billion.
…
But the effort, intended to be discreet, rattled the market for subprime-mortgage debt on Thursday when some market participants learned the New York Fed was considering additional sales of bonds from the portfolio known as Maiden Lane II.
“Maiden Lane”? A more appropriate name would be Hersey Highway, in honor of the reaming taxpayers will get, yet again, when the Fed and its Primary Dealer accomplices hive off more non-performing MBS toxic waste onto them.
Maiden Lane is a street in downtown New York. No need to get your knickerbockers in a twist over stuff that is really trivial like that. You’ll live longer.
lmao SS!
By all means, let’s cut the food stamp program.
“…The 17-year-old senior says she cannot believe that she is one of the semifinalists in the highly prestigious Intel Science Competition, in part because she lives in a Bay Shore homeless shelter with her parents, brother, and twin sisters….”
http://newyork.cbslocal.com/2012/01/12/homeless-long-island-teenager-is-intel-competition-semifinalist/
Romney benefited from Baine (at our expense). Gingrich was bane in his destruction of fair and honest politics, and Ron Paul was baneful of the aforementioned.
Colbert could mix it up well, but can he generate the bucks to get on the ballots?
They wouldn’t let him on the South Carolina ballot, but he’s encouraging a write-in. And yes, his SuperPAC is funded well into the six figures. He also has this TV show, which of course does not coordinate with his SuperPAC….
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