Bits Bucket for January 14, 2012
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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
June 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
http://www.bloomberg.com/news/2012-01-13/fed-s-evans-says-policy-risks-errors-of-japan-great-depression.html
oh well not a dime for us peons who could use a break today
big acident on the corner looks like 3 cars fighting for the same lane, ambulances cops …hey its 247 am wonder how many were soused? back to bed mabye first? haha
“Federal Reserve Bank of Chicago President Charles Evans said the drop in the unemployment rate to 8.5 percent may be partially reversed in coming months.”
They`re not going to keep Santa and his helpers on full time?
The numbers are all rigged, anyways. ALL government accounting is political theater. I’m still UNemployed, but according to the FED, I am not. I’m, uhh, “marginally attached to the workforce” or something like that. Oh, no, i’m voluntarily retired? whatever rhetoric they use.
The FACTS are simple. There are no more people working today than in 1998 or thereabouts, with increasing population. More people UNemployed than are counted. If you don’t get an unemployment check (payments expired), you are not part of the pool. Conversely, if you do get a Retirement check, and also took on a day job, you are employed, even though you have ‘retired’
(see government benefits program). That’s rigged accounting.
Sorry to hear that you’re unemployed, Diogenes, and hope something decent turns up for you. The faked unemployment numbers and meaningless abstractions like “consumer confidence” (like the denizens of IDIOCRACY can make sound assessments of the economy) are so much smoke and mirrors.
Consumer confidence can only get you so far when you have no money to spend.
I’m still UNemployed, but according to the FED, I am not. I’m, uhh, “marginally attached to the workforce” or something like that.
You’re a deadbeat. Take a bath and get a job.
That goes against my most recent pledges to conserve water and energy, my energy.
Dio should be Newtered!! -
Jan 13, 2012 11:47am
R.I.P., Department of Commerce? President Obama Seeks to Consolidate Government Agencies
The Department of Commerce will celebrate its 109th anniversary this year, having been created in 1903. And if President Obama gets his way, the agency won’t make it much past 110.
Announcing this morning that he is seeking authority to streamline the executive branch, President Obama said he needs the same kind of “authority that every business owner has to make sure that his or her company keeps pace with the times. And let me be clear: I will only use this authority for reforms that result in more efficiency, better service, and a leaner government.”
As an example, the president wants to shut down the Department of Commerce, taking its core functions and giving them to a new agency that will also fold in the tasks of the Small Business Administration, the U.S. Trade Representative, the Overseas Private Investment Corporation, the Trade and Development Agency and the Export-Import Bank.
The savings the administration claims will come from this move is roughly 1/400th of the $1.2 trillion increase in the debt limit that the president formally informed Congress yesterday that he was seeking.
“Right now, there are six departments and agencies focused primarily on business and trade in the federal government,” the president said. “Six. In this case, six isn’t better than one. It’s redundant and inefficient. With the authority I am requesting today, we could consolidate them all into one department with one website, one phone number and one mission – helping American businesses succeed.”
The president added: “This is a big idea.”
…
Maybe Obama could merge the Treasury, Federal Reserve, and Goldman Sachs, since under the Republicrats they all work for the same purpose: to enrich the .01% at the expense of everyone else.
How about eliminating HUD and DOE? Or merging the two? Now THERE’S an idea…Two dysfunctional departments.
DOE? Excellent. Should we hire Haliburton to take care of all the nukes? How much do you think they will charge?
That won’t work, if Uncle Sam plans to cut back on contractors. Of course, there are many who deeply believe the private sector always does it better; I expect this costly belief will take deeper hold if Romney is elected.
Isn’t the American Dream to rip off the Government in some manner? Monumentally if possible?
If you’re in the .01%, your obscene bonuses assume a limitless ability to rip off taxpayers, aided and abetted, of course, by your Republicrat hirelings.
Solyndra, The Scooter Store, anything healthcare related, all FIRE rackets, etc…
“Solyndra, The Scooter Store, anything healthcare related, all FIRE rackets, etc…,”
Liz,
You’ve got me thinking. The Scooter Store……. Solyndra………..
That’s it! Solar powered scooters! This could be the next great industry to lead Amerika forward!
Quick Jeff, get us a marketing jingle.
It’s too bad ALL these companies exist simply because of MEDICARE. VERY FEW people would be rolling their FAT, useless butts around in “scooters”, if the US government weren’t picking up the tab.
In fact, they may even find it necessary to diet and LOSE weight so they could be mobile, again. That would mean they need to provide THEMSELVES with “healthcare”, not government-sponsored Medical care. What a concept!@
“Quick Jeff, get us a marketing jingle.”
Get your Scooter runnin’
Plug-ins on the highway
Looking for adventure
In whatever comes our way
Yeah, darlin’
Gonna make it happen
Take the world in a love embrace
Take all of your guns at once
And explode into space
Like a true nature child
We were born
Born to be wild
With the Health Care Bill
Your never gonna die
Bankruptcy filed
Bankruptcy filed
BRAVO!
You had me laughin’ at the first line. Drop that screw gun and meet me in the studio. I know at least five chords!
Good job man!
Ditto. LOLz.
Yep.
Liz Pendens: Isn’t the American Dream to rip off the Government in some manner? Monumentally if possible?
pretty funny
What’s bigger than Too Big To Fail?
A: Years ago, it was thought to be a swastika.
They are ALready merged. Just consider them branches of the same agency…….
Goldman Stealing Enterprise (GSE).
Don’t forget the Cabinet! It was a four-entity merger, not a threesome.
It’s sad to see the Commander in Chief reduced to rearranging the furniture in the Oval Office and scheming to concentrate power while muttering about how brilliant he is. Hey Captain, did you notice the ship is taking on water?
Anyway Mr., you don’t own the company, you were hired to watch over it.
It is a first strike against nominee Romney that has also suggested closing Commerce, along with energy and education… when he can manage to remember which 3 departments he wants to close.
I think that was Perry
It was Rick Perry, not Romney, who had the memory lapse about which federal departments to close during the debates.
And did it again yesterday on the Radio…
The memory thing doesn’t matter much. Reagan didn’t understand a lot of what was going on, but he had staff to tell him what to do.
“The memory thing doesn’t matter much. Reagan didn’t understand a lot of what was going on, but he had staff to tell him what to do.”
I beg to differ. All the evidence I have seen in my day suggests the RNC prefers weak thinkers who are easily programmable to strong, independent types. Their lack of enthusiasm for strong candidates Romney and Paul seems to support my point.
Not really sure where Newt fits into this discussion — he seems to have gone Democrat against Romney’s free market capitalist ideals, making him somewhat hard to classify as a conservative Republican candidate.
Reagan had Nancy to take over when the Alzheimer’s got bad.
And Mommy deferred to her astrologer.
The ship on its side half submerged in Italy comes to mind when thinking of Captain Obama.
President Obama the… Budget Cutter…
BAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAAAAAA (cough)
Don’t be surprised to see him pivot to the center right on physical policy after the election…
You mean BEFORE the election - to run away and “duck and cover” from his utterly failed economic policies…
If he gets elected to a second term - he will not care a wit about any failure of his policies…
.Don’t be surprised to see him pivot to the center right on physical policy after the election…
You mean BEFORE the election ??
No, I said “after” the election…He will not alienate the people that he needs to gain re-election…Big Unions come to mind…After the election;
Don’t be surprised if he pivots center-right on physical policy…
“Physical” policy? Does that mean he’ll turn all the federal law enforcement branches loose on his political opponents?
Truncheons and tasers and mace, oh my!
Barack could go Ron Paul. It would cause the ten (my estimate) socialists on HBB to go nuts. barack could be the first libertarian president since Calvin Coolidge.
Its no secret were broke right ?? America, as a union, is going to need to go through its own Bankruptcy reorganization…There is no other choice…A few winners in that they only took a haircut (military comes to mind) but mostly losers as you would expect coming out of a bankruptcy…Obama may pivot right-center on physical policy because that may be his only choice…
And Turbo Tax Timmy could suddenly stop giving megabanks whatever they desire. And banksters would start doing volunteer work in homeless shelters.
Barack could go Ron Paul.
I’m having a hard time imagining that. First wouldn’t it require him to fire most of his people?
And Turbo Tax Timmy could suddenly stop giving megabanks whatever they desire. And banksters would start doing volunteer work in homeless shelters ??
Its your right to be cynical if you wish…I choose to be pragmatic…I am looking out on the Horizon and I see historical winds of change coming…IMO, the most since FDR…
It will be interesting to see how Obama will react to the lovefest between his former Wall Street bankrollers and their new love interest, Mitt Romney. He could actually redeem himself in the eyes of the 99% if he belatedly showed some concern for the welfare of the nation and economy as a whole, rather than just doing the bidding of the .01% as dictated by the “former” Goldman Sachs alumni setting his fiscal policies.
If Romney is elected I think they should save us all some trouble and Obama should just run as his VP or vice versa. That kind of consolidation would save us money.
Actually, both Obama and Romney could golf and vacation year-round while Jamie Dimon and Lloyd Blankfein run the show.
I thought that was what was going on NOW. Are you suggesting that they go ahead and take up a desk in the Oval Office, so we know, for sure, who really runs the government?
+1
I would have guessed the plan was for Jamie Dimon and Lloyd Blankfein to run the show while they golfed and vacationed year-round?
Obamney 2012?
RomBama 2012 has a better ring and works better for motivating music with a driving background rhythm!
True. I like it, Robin.
RomBAMA!
If this federal government perestroika movement gains traction on both sides of the aisle, I foresee future convergence between home prices across cities with large concentrations of federal employees and other cities. DC and San Diego will no longer be places where everyone wants to live, and their home prices will adjust downwards to reflect this.
All real estate isn’t local any more…
San Diego will no longer be places where everyone wants to live ??
Are you anticipating major climate change p-bear ??
The nice thing about climate change is that politicians can propose and perhaps even implement their grandiose plans to fix it, but nobody will ever be able to hold them to account. No matter how the data turn out in the short term of their political tenure, it is certain to be impossible to gauge whether their policies worked. Hence they can take credit for doing something without ever fearing the outcome will contradict their claimed success.
What happens to the Commerce Czar???
Wal Mart greeter, maybe?
He becomes a passenger in the Commerce ClownCar
ft dot com
Last updated: January 13, 2012 11:52 pm
S&P downgrades France and Austria
By Gerrit Wiesmann in Berlin, Peter Spiegel in Brussels and Robin Wigglesworth in London
The eurozone debt crisis returned with a vengeance on Friday as Standard & Poor’s, the credit rating agency, downgraded France and Austria – two of the currency zone’s six triple A rated countries – as well as seven nations not in that top tier, among them Italy and Spain.
S&P, under political fire since it announced a review or eurozone debt in December, gave 14 of 16 countries – including France, Italy and Spain – a negative outlook, which it said meant a one-in-three chance for each country of a further downgrade this year or next.
…
A ‘Gigantic Sweet Spot’: Fed Thought Housing Hunky Dory in ‘06
PHOTO: Federal Reserve Board Chairman Ben Bernanke, left, testifies with Paul Volcker, Chairman of the President’s Economic Recovery Advisory Board.
By ALAN FARNHAM
Jan. 13, 2012
Newly released transcripts of Federal Reserve Board meetings show that even as disaster loomed, iceberg-like, for the U.S. economy in 2006 because of inflated housing prices, the board remained lagely clueless.
In January, as the Fed met to give a rousing send-off to its retiring long-time chairman, Alan Greenspan, Janet Yellen, then president of the Federal Reserve Bank of San Francisco, struggled to find the right encomium with which to send him on his way.
Unhappily for her in retrospect, she found it:
“It is fitting,” intoned Yellen, “for “Chairman Greenspan to leave office with the economy in such solid shape.” (One imagines, here, the doric marble columns in the background trembling slightly.) “The situation you are handing off to your successor is a lot like a tennis racquet with a gigantic sweet spot.”
…
We had no clue……
…which is why we replanced bubbelicious Greenspan with the world’s leading expert on the Great Depression.
They can lie all they want, but look to the evidence.
What you fail to see is that this is how ALL government agencies, and even the FED, a private agency masquerading as a government agency, ACT. They are ALWAYS, self-congratulatory, self-absorbed, and self-interested.
They NEVER see anything wrong with anything they do, and laud laurels upon each other for whatever acts they commit.
Whenever, things go terribly wrong, the answer is ALWAYS the same: “No one could have seen this coming. We reacted to the situation the best we could. We could not have stopped it”> blah, blah, blah……..now let’s see………
If I can keep this job another 8 years, i’ll have 347 accrued vacation days, 25 years in pension benefits, another 6 weeks of paid leave each year, and can boost my earnings the last 3 years to get an annual salary for LIFE that is greater than my 140% of private workers earnings, today.
We ALL just need to cover for each other. And, in the event one of us needs to be sacrificed for the horrible mess that we have created, we will all agree that they should get PAID LEAVE, and FULL Retirement benefits when they leave. After all, we’ve EARNED IT!!!!
Federal Reserve missed signs as crisis loomed
Transcripts of 2006 policymaker meetings illustrate a glaring absence of alarm.
January 12, 2012|By Don Lee, Los Angeles Times
Reporting from Washington — Despite signs of trouble for the nation’s overheated housing market in 2006, there was plenty of banter and laughter around the big mahogany and granite table inside the Federal Reserve where top policymakers gathered one day in March.
Running his first meeting as chairman of the central bank, Ben S. Bernanke, in his collegial style, solicited observations about the economy from colleagues. Some of the Fed’s staff earlier had talked about the potential risks, but in that meeting and in subsequent ones that year, there was a glaring absence of alarm about the dangers of the housing bubble and what might lie ahead for the broader economy.
…
By 2006 even upper-middle-class families were in hoc up to their eye teeth. I find it amazing that top-level economists don’t follow these trends. Who do they think actually supports the country? Economics as the dismal science is an understatement.
Chicago Fed chief defends housing suggestions
BY JULIE MORSE Realty Insites January 13, 2012 12:48PM
Updated: January 13, 2012 3:34PM
When Charles L. Evans talks, people listen.
The president and CEO of the Federal Reserve Bank of Chicago recently spoke to about 200 business leaders at a presentation sponsored by the Lake Forest-Lake Bluff Rotary Club. They came to hear his personal perspectives on the current economy — and one of the topics was housing.
Evans noted that recent economic activity has been “encouraging” but also that recovery has been “painstakingly slow.” He said that a more vibrant housing market is one of the key improvements needed to boost home prices and lift the overall economy.
He further noted that the Fed had recently been criticized by some Congressional leaders for issuing a special white paper on housing issues, which also suggested potential policy solutions. Whether perceived as contentious or not, Evans felt the paper focused needed attention on solving the distress sale crisis and improving valuations so that true economic recovery could begin.
“We need a situation where houses can be sold and get the market moving up again,” Evans said.
The National Association of Home Builders and the National Association of Realtors strongly agree with Evans and other Federal Reserve leaders, too. Both NAHB and NAR endorse specific recommendations in the above-noted white paper — such as loosening mortgage lending and refinancing criteria for credit-worthy borrowers.
…
Comment by X-GSfixr
2012-01-13 15:42:42
“All of the tightwads that are on this board are circling like vultures, drooling for the chance to buy up their impoverished neighbor’s assets for pennies on the dollar…”
Maybe not all. I don’t particularly want anything of my neighbor’s. I would like not to run out of beans, bandaids, booze and viagra. In 2006 I put up some supplies, which included some folding money. If normal things become difficult, it will give me and my kids some distance from hand to mouth living.
Not like this guy, but more than 1 month’s worth.
http://tinyurl.com/7f7j6yd
I didn’t have to “retire” in 2008 as I thought was likely. In retrospect, it wasn’t too crazy to be somewhat prepared then and I think now just about the same. Hoarding is a judgement call, too little is foolish, too mch is evil. It is hard to know a hoarder’s intent, but it is easy to predict the sentiment of those without.
I noticed another thing, the last few years have seen record gun sales and I would say most of them have a bit of that survivalist mindset. They are selling lots of guns but most of them are to existing gun owners. One to three guns I can understand but some of these folks have 2 or 3 times what most people would think is practical. Do you think if Rick Perry, Herman Cain or Michele Bachmanm were elected these people would stop buying more guns? I would guess the opposite, a lot of them would just upgrade their arsenals.
I just wish they would invent Star Trek phasers so we can have some real fun with the 2nd. amendment.
A lot more women are buying hand guns…
I think they would stop buying if a Republican was put in office.
My brother sells guns and they were going like hotcakes right before Obama was inaugurated.
He said they all had heard some “rumor” that Obama was going to outlaw gun possession.
Where can I get one of those family-sized pepper sprays the cops have?
Now why in the world would you want to pepper-spray your family, Liz?
LOL, Sammy! Nice…
Low-hanging fruit
One to three guns I can understand but some of these folks have 2 or 3 times what most people would think is practical.
1) Most people are sheep
2) Most gun owners enjoy owning and shooting different types and calibers of firearm. You don’t necessarily hunt ducks or deer, or defend your castle, or deal with a zombie outbreak, with the same firearm.
3) If a situation ever arises where guns are actually needed for self-defense, i.e. during the LA riots, chances are that gun owners will be beseiged by gunless (and clueless) family, friends, and neighbors panicking because they have no means to protect their families and property and the cops are nowhere to be found.
In short, you might want to redefine your notion of “practical” numbers of firearms per household. Twenty might be excessive; six or seven is not.
“One to three guns I can understand but some of these folks have 2 or 3 times what most people would think is practical.”
It’s the American way; same principle applies to houses and stomach flab.
I see you get my point. 98% of the population relies on industrialized agricultural farm->factory->consumer model to exist and would quickly starve if they had to hunt their food supply. The justification for game hunting pretty much says it’s just a blood sport now (with the exception of culling). There is really a strange ‘tingle’ one feels when you hold a loaded weapon and there are few substitutes.
Unlike you, BlueStar, I can’t really say I get a twitch in my pants when I caress a loaded firearm. I also haven’t hunted in years. I own guns because I like to punch holes in paper targets, and I like the feeling that comes from being able to protect my home and family.
I think maybe tingle was a poor choice of words. What I am referring to is a chemical reaction in the brain, specifically adrenalin. Just now in your response you used the words ‘twitch in my pants’ and ‘caress’ which evoke a sexual connotation. So for you I guess the chemical response is testosterone?
PS: I like to shoot paint balls and it’s actually is better training if you think you will be using your gun in real world situations with real armed humans. Shooting at paper targets is good practice for snipers though.
Let’s not lose the context.
The post about “debt as money a two-way social contract” revolves around $38T in outstanding total debt, and the $38T in offsetting money that exists somewhere in the world.
$14T household debt, $11T business debt, $10T fed gov debt, $3T state and local gov.
$38T / 118 million households = $322K per houehold. $50K inome = 6.5x annual income.
I am not talking about people with a couple months of income sitting in the bank. When I say that the people with the money need to spend it, I’m talking about the people with the millions, billions, trillions…..
If they do not spend it, then the debt can’t be repaid, it will default, there will be mass money poofage, and depression.
I am sure they will turn around and blame the people in debt, for whom it was absolutely, fundamentally impossible to repay the debts when the people with money refused to spend it.
Those people loaned the money to you. Pay it back now so they can keep things moving.
Skye,
Don’t you believe there is, has been and needs to be a social contract in the manners described by Locke, Hobbes and Gene Jok Clouseau? (or was that Rousseau) IDK because I don’t speak FRENCH! But don’t you believe in the “social contract”?
Rio, yes i suppose I do. I vote and drive below the speed limit to that end. I believe in charity as well, and recognize having benefited from same. I don’t shoot my rifle towards houses.
I met a lady at a craft fair who raises Alpaca. She combs them and spins yarn from the wool with which she nkits socks. She insisted that I but a pair for $18. She insisted that I was obliged to buy the socks so that she could continue her gentle husbandry of the Alpaca. I declined, though I complemented her on the quality of her wares. I didn’t suppose that I was a willing part of her business plan.
I had an Alpaca spit a copious amount of snot and chewed hay on me recently. I’m looking for a business plan that involves stew and a tanned hide from that particular specimen.
I met a lady at a craft fair who raises Alpaca.
Thanks, I think I’ll stick with Jok Clouseau.
The point is, the “they” that loaned the money, now have the money again.
The people with $38T in debt do not have the $38T needed to pay back the debt, the people with the $38T of money have the money.
The ONLY way the people with the $38T in debt can pay back that debt is if the people with the $38T in money SPEND that money so that the people with the debt can get it.
Debt is always equal to money.
It is impossible for the people with debt to have less debt, unless the people with the money have less money.
I can explain it to you, but I can’t understand it for you.
If the people with the money, refuse to spend the money, then there is nothing that the people with the debt can do other than default.
It isn’t a moral flaw, it is mathmatical certaintity.
See, you can ask them to spend it, and they won’t. That’s why we began the progressive income tax. Money naturally pools in the hands of the few in capitalism (since cronyism and favoritism are nearly impossible to stop), and that pooling is actually bad for capitalism overall, as we are seeing. Just like blood, that money needs to flow through the system, for the system to work. But history has shown that it won’t happen just by asking the wealthy to spend it. They’d rather loan it to the wee people, or invest it in emerging markets where there are fresh wee people/suckers.
You’ve gotta tax ‘em. And use the proceeds to help the little guys. And before anyone panics and calls it expropriation, the money quickly returns to the pockets of the rich, and the whole system is the better for it. Even the rich are better off, safer from the real expropriation that takes place when wealth disparity sets off violent revolution.
The rich do not as much spend money as they loan it at interest.
+1 Blue
In this society, anybody who only spends money he actually HAS is considered to be a tightwad.
Because there is no way to fund a $600B a year international trade deficit and contonued corporate profits and a widening wealth disparity, without new net debt/money.
The flaw is not with the people that live on debt. The problem is an economy that can’t function without debt, so government enabled and encouraged people to live on debt.
Reagonomics!
“All of the tightwads” did not refer to everyone on the board.
I think you can guess as to who I am referring to.
http://www.telegraph.co.uk/news/worldnews/republicans/9014259/US-election-2012-Mitt-Romney-attacked-by-Republican-rival-for-speaking-French.html
Another indication, not that any more were needed, of the imbecility of the Establishment GOP base and unscrupulous politicians’ lowlife pandering to the IDIOCRACY that America has become.
I know some French
Hey sister, go sister, soul sister, go sister
Hey sister, go sister, soul sister, go sister
Hey sister, go sister, soul sister, go sister
Hey sister, go sister, soul sister, go sister
Gitchi gitchi yaya dada
Gitchi gitchi yaya here
Mocha chocolata, yaya
Where d’you think you’re sleeping tonight? Oh
Voulez-vous coucher avec moi, ce soir?
Voulez-vous coucher avec moi?
Voulez-vous coucher avec moi?
Voulez-vous coucher avec moi?
Its amazing how many #1 songs are about prostitues
I didn`t know what… Voulez-vous coucher avec moi, ce soir? meant until a French Canadian drywall finisher told me in 1993. Still not exactly sure what…Gitchi gitchi yaya dada
Gitchi gitchi yaya here means, but I got an idea.
Do you want to sleep/go to bed with me, tonight?
Uh-oh! Red alert, Sammy. We got two of them up here!
How many can you name?
I don`t think this hit #1
Bob Seger
Fire Down Below
Here comes old Rosie she’s looking mighty fine
Here comes hot Nancy she’s steppin’ right on time
There go the street lights bringin on the night
Here come the men faces hidden from the light
All through the shadows they come and they go
With only one thing in common
They got the fire down below
Police Roxanne lyrics
Roxanne, you don’t have to put on the red light
Those days are over
You don’t have to sell your body to the night
Roxanne, you don’t have to wear that dress tonight
Walk the streets for money
You don’t care if it’s wrong or if it’s right
rolling stones…
I was a hooker losing her looks
I was a writer, could’nt write another book
From “You Got Me Rocking”
songs (that) are about prostitutes
“All along the Watchtower”
“American Jesus”
“Hail to the Chief”
“American Idiot”
Keep on “Rockin’ in the Free World”
“It ain’t me”
“The End of the Innocence”
“Politician”
“White House Blues”
“Bernanke is a good little whore” -a classic.
Think this only went to #3 but: Prostitutes andcross dressers in one!
Elton John/Bernie Taupin…..Island Girl
I see your teeth flash, Jamaican honey so sweet
Down where Lexington cross 47th Street
She’s a big girl, she’s standing six foot three
Turning tricks for the dudes in the big city
Island girl
What you wanting with the white man’s world
Island girl
Black boy want you in his island world
He want to take you from the racket boss
He want to save you but the cause is lost
Island girl, island girl, island girl
Tell me what you wanting with the white man’s world
She’s black as coal but she burn like a fire
And she wrap herself around you like a well worn tire
You feel her nail scratch your back just like a rake
He one more gone, he one more John who make the mistake
I had no idea Island Girl was about a cross-dresser. I’m pretty sure alpha-sloth has her number if anyone wants it.
LMAO!
Island Girl
This Dutch guy was laughing while telling me about his friend that met this tall and tan Brazilian girl in a bar and he took her back to his hotel and then he comes to find out that the and by the time he noticed that when it almost too late to but he didn’t want to be rude or involve cops so ended up saying he had headache and gave her money to “get home”.
You guys are disappointing me
You forgot “La Grange”
” ended up saying he had headache and gave her money to “get home”.”
Now who’s being naive?
“I had no idea Island Girl was about a cross-dresser. I’m pretty sure alpha-sloth has her number if anyone wants it.”
Step right up, conservative-family-value types. We all know you’re interested. (That’s why you want to ban it. Because then you wouldn’t be so tempted.)
Oh, and thanks for the shout-out Sammy. You’re living up to the new Libertarian ideal of being further right than paleo-conservatives, just as Rothbard strategized as he and Rockwell, your little hero, took over and destroyed the Libertarian party. Got rid of the pot-smokers, and replaced them with little Archie Bunker fascists like yourself. Great work, fellas. We’ll see how it works out.
And anyway, you guys missed one of my faves, it was a #1 hit for the Andrew Sisters- whose version is actually pretty good:
Rum and Co-ca Co-la
by Lord Invader
If you ever go down Trinidad
They make you feel so very glad
Calypso sing and make up rhyme
Guarantee you one real good fine time
Drinkin’ rum and Coca-Cola
Go down Point Koomahnah
Both mother and daughter
Workin’ for the Yankee dollar
Alpha, you ignorant slut, clearly one of your multiple strains of Syphilis is eating away at whatever limited sanity you had to begin with. Not sure when Lew Rockwell (assume that’s who you’re referring to) became my “hero” or how I ended up an “Archie Bunker Fascist” in your view, or what “new Libertarian ideal” I’m supposedly living up to, or when you became such an ad homenium anal polyp for that matter.
Not sure when Lew Rockwell (assume that’s who you’re referring to) became my “hero” or how I ended up an “Archie Bunker Fascist” in your view,
You post Lew’s absurd shite all the time (He’s the guy most people in the know think ghost-wrote Ron Pauls’ ridiculous infantile racist rant/newsletters).
You’re an Archie Bunker fascist because you imply stupid people (which is anyone who doesn’t agree with you) don’t deserve rights, you’re an anti-minority blowhard, and you call for corporal punishment for minor property crimes, amongst many other fascist positions.
Keep telling yourself you’re a libertarian. It doesn’t change what you really are.
or when you became such an ad homenium anal polyp for that matter.
Amusing, in its idiocy.
I’ve posted maybe five or six Lew Rockwell pieces in the past four years. Not quite “all the time.” People can judge his work on its own merits.
I never said stupid people don’t deserve rights. I just don’t appreciate them setting public policy, picking leaders, or making idiotic choices that then become my problem.
As far as corporal punishment, hell yeah, I’d love to see vermin who break into other people’s houses and cars or steal copper from our infrastructure and monuments get a Singapore-style, angry-red-welts-on-the-ass beating with a bamboo cane wielded by a martial arts master. Preferably, in public. You may consider that “cruel and unusual”: what I think is cruel is the peace of mind that millions of Americans are robbed of after being victimized by scum, or being imprisoned in their own homes. It might impress on criminals the concept of consequences, and that society isn’t going to put up with their scumbaggery anymore.
I don’t tell myself or anyone else that I’m a Libertarian. I do believe in individual rights and responsibilities, though.
“Anti-minority blowhard”? Funny how libs who haven’t got a leg to stand on logic-wise always try to stifle debate by throwing around accusations of racism.
You are amusing in your idiocy.
‘He’s the guy most people in the know think’
Yeah, well this has been covered here and I posted this video before. Note that the neocons are involved and made an effort to hide who the author was.
http://www.youtube.com/watch?v=1SwKixWPz4Q
No offense, Ben, but that video seems like a weak piece of political propaganda. It presents itself as a TV news piece with anchors and whatnot, but it isn’t. It seems like a late-night paid programming kind of thing.
And the argument they present is thinner than a 1$ hamburger. One or two short quotes that use similar wording, and that somehow proves that whoever was the author of the one article was also the author of all the articles? And the fact that absolutely no one else in the world has come to a similar conclusion is presented with a wink as proof that the theory is true?
___
Sammy, your post proves my points perfectly. Thank you, my friend. May you never have to live in the world you mistakenly think you want.
‘a weak piece of political propaganda’
No, it is investigative journalism. Interesting that the neocon magazine couldn’t find what they did, huh? What proof do you have that Rockwell wrote anything? And you are ‘in the know’ how? Back it up then.
It’s pretty disgusting to go around anonymously accusing people of racism without any proof at all. When you do that kind of thing, the discussion is over with me.
The video made me realize that I was brought up by my parents as a racist. They taught me that all races are equal They were (are) very religious, and I am agnostic.
In the intervening years, I have learned to distrust certain religious people and people of certain political parties. Nothing to do with race.
I have learned to distrust skinheads, though I am white.
I distrust misogynists because I love my wife and women as a whole. It seems to me that racism is the umbrella of hatred, preceded only by xenophobia.
How can a person justify a feeling of superiority based solely
on their unwitting availability as an ovum or sperm?
That piece referred only to the 1993 publications and their relatively staid content.
The ones I subscribed to ten years earlier (1984-86) were written by Lew Rockwell and Ron Paul. There were only two other people on the masthead, Paul’s wife, who handled circulation, and the accountant who apparently also did the typesetting. And that was that.
Paul’s in-person speeches echoed his printed screeds and they were cringe inducing. Granted this was nearly 30 years ago, and much has changed in that time, but it WAS Ron Paul and Lew Rockwell writing the newsletter, and this is not an “accusation.” It is a fact.
Remember the George Wallace repudiated his racism and actually redeemed himself in his later life in politics. So did Barry Goldwater. Paul could easily be another example, and I’m going down to my ex’s house in Newport to rummage around and see if somewhere amongst all the paper junk he never throws away is a copy of one of those things stuck in a trunk somewhere. If so, you’ll be in for an eye-opener.
Finally, Ben, I believe you know that I AM a credible person– with no bone to pick. I as recall, someone else on this blog subscribed back then, too. And will confirm what I mention here. Like all politicians, Ron Paul has some good ideas. He also had some very unfortunate hatreds.
‘you’ll be in for an eye-opener’
Do any of you actually know Dr Paul? Have you ever spent any time with him? I have and he never said anything like this in all the hours we talked.
Here we are, standing on the edge of yet another war, pushed by publications like the National Review. Fresh off a war they helped lie us into, that killed hundreds of thousands of innocent non-white people. Somehow, that’s OK.
you mean made by prostitutes, don’t you?
Yup
Earlier in the week I was told this about what happened to LYNN SZYMONIAK of 60 minutes Robo signing fame.
“Lynn is a good person.”
“I consider the whole thing a fever that swept normally responsible people and causes them to lose their judgement. They do not need to be stoned in the public square. Having a mortgage that is upside down does not make one “unsavory”.”
Now that I have had time to calm down and think about it…..
Hollaback Girl lyrics
Songwriters: Stefani, Gwen Renee; Williams, Pharrell;
Type: MTG
Party 1: SZYMONIAK LYNN E
Consideration: $314,200.00
Date/Time: 5/8/1998 03:10:33
A few times I’ve been around that track
So it’s not just gonna happen like that
‘Cause I ain’t no Payuback Girl
I ain’t no Payuback Girl
Type: MTG
Party 1: SZYMONIAK LYNN E
Consideration: $220,000.00
Date/Time: 7/18/2001 09:36:59
I heard that you were talking sh#t
And you didn’t think that I would hear it
People hear you talking like that, getting everybody fired up
So I’m ready to attack, gonna lead the pack
Gonna get a free house, gonna take you out
That’s right, put your public records down, getting everybody fired up
A few times I’ve been around that track
So it’s not just gonna happen like that
‘Cause I ain’t no Payuback Girl
I ain’t no Payuback Girl
Type: MTG
Party 1: SZYMONIAK LYNN E
Consideration: $270,269.69
Date/Time: 9/15/2004 17:18:11
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
So that’s right dude, meet me on 60 minutes
No deficiency judgements, no 1099’s and no public records
All the victims want to be the winner
So I’m gonna fight, gonna give it my all
Gonna make you fall, gonna sock it to you
That’s right, I’m the last one standing, another one bites the dust
A few times I’ve been around that track
So it’s not just gonna happen like that
‘Cause I ain’t no Payuback Girl
I ain’t no Payuback Girl
Type: MTG
Party 1: SZYMONIAK LYNN E
Consideration: $415,000.00
Date/Time: 1/3/2005 11:28:53
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Type: MTG
Date/Time: 2/15/2006 08:27:13
Consideration: $780,000.00
Party 1: SZYMONIAK LYNN E
Let me hear you say, Refi bananas
B A N A N A S
Refi bananas
B A N A N A S
Again, Refi bananas
B A N A N A S
Refi bananas
B A N A N A S
Type: LP
Date/Time: 8/6/2008 16:00:12
Party 1: DEUTSCHE BANK NATIONAL TRUST COMPANY TRUSTEE
Party 2: SZYMONIAK LYNN E
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
Ooh, this my shack, this my shack
A few times I’ve been around that track
So it’s not just gonna happen like that
‘Cause I ain’t no Payuback Girl
I ain’t no Payuback Girl
Occupy protestors shouldn’t be tallied as homeless if they’re not, federal surveyors say
By Jennifer Sorentrue Palm Beach Post Staff Writer
Posted: 5:45 p.m. Friday, Jan. 13, 2012
Protesters living at Occupy campsites across the country who do not lack regular housing should not be counted by local governments slated to conduct an annual survey of the homeless this month, the U.S. Department of Housing and Urban Development said.
In an email sent to Palm Beach County and hundreds of other governments throughout the country, federal officials said activists who are choosing to stay at the campsites as a “form of public protest” should be excluded from count.
Occupy protesters that are in fact homeless should not be given special treatment when applying for the rapid rehousing program funded by federal stimulus money, HUD said. The program helps families living in emergency shelters find affordable, permanent housing.
“Residing in an “Occupy” encampment does not entitle someone to receive special treatment or a different eligibility criteria compared to other homeless persons, and does not give them any priority,” the email said.
http://www.palmbeachpost.com/news/nation/occupy-protestors-shouldnt-be-tallied-as-homeless-if-2100782.html
Does anyone know what the “rapid rehousing program funded by federal stimulus money”s is ??? What is this??
There is so much Federal money going around, there’ no way to keep track of who gets all the graft.
But I hadn’t heard of this one. Please let me know who else is getting free government cheese.
No cheese for you. NEXT!
Anyone see this movie?
——————————
The Company Men
American Thinker | 01/14/2012 | Jon N. Hall
A terrific 2010 movie that examines the heartbreak caused by corporate downsizing has come to cable TV. The Company Men follows the lives of three executives fired by a conglomerate trying to prop up its stock price and fend off a leveraged buyout. If you care about the future of American business in the brave new world of globalism, this movie is for you.
Set in the present, the main focus of The Company Men is on the personal adjustments each exec must make in coping with the loss of a job. The film treats personal bankruptcy, foreclosure, and even the loss of a beloved sports car. The Company Men is that rarest of movies — it’s for grownups. It touches on even morality, of all things.
One of the reasons I’m pointing you to this flick is because I fear that many Americans still haven’t come to grips with what recent events mean for them. Folks are in denial about debt, be it personal, corporate, or government. The loss of a job wouldn’t be so devastating for our execs were they not living so far beyond their means. Their ability to make mortgage payments is entirely contingent upon the cash flow provided by employment. If they had bought more modest homes, they might have been able to hang onto them. Too many Americans predicate their lives on things humming along just as they have been. Folks plan their lives around things not changing. But they always do.
If people were not living beyond their means, then there would not have been an economy in the first place.
Saying we had a good economy depite the debt is like saying the ugly girl got pretty despite the alcohol.
If you do not understand that every transaction must have a buyer and a seller, and therefore, total goods bought must equal total sold, meaning it is only possible for one person to sell more than they buy (accumulating money) IF someone lese is spending more than they make by borrowing money into existance.
Money and debt are flip sides of the same transaction. There is no money without offsetting debt.
People still treat money as if it mana from heaven that appears despite, not because of, debt.
Get a clue.
It is fundamentally impossible for everyone to live below their means, accumulating money.
It is only possible for everyone to live within thier means, if you do not have international trade deficits nor widening wealth disparity. In an economy crafted by the rich and powerful so that they can get ever richer and more powerful while funding massive international trade deficits, it is fundamentally impossible for anything other than exploding debt.
Look at teh Federal Reserve Z.1, table D3. You see total debt increasing at 3x the sustainabel rate for 30 years. That exploding debt was what enabled, our economy to exist, PERIOD!
If you do not understand this, then you should stop attempting to talk economics.
The only reason we were able to get out of the late 70s, early 80s economic suck times was becasue we deregulated finaicial sectors and enabled and encouraged the vast majority of Americans to live way beyond their means. Without the exploding debt, in the face of massive trade deficits, we would have been in recession for the last 30 years.
Debt that does not have to be paid back enriches the debtor.
Debt that does not get paid back is theft.
Without the looting, we wouldn’t have been able to live way beyond our means for the last 30 years.
Got it.
The percentage you’re paying is too high priced
While you’re living beyond all your means
And the man in the suit has just bought a new car
From the profit he’s made on your dreams
But today you just read that the man was shot dead
By a gun that didn’t make any noise
And it wasn’t the bullet that laid him to rest was
The low spark of high-heeled boys
Yes, I get it.
I borrow money. I buy stuff with it. The person I buy from gets money that I borrowed into existance.
Now, that person with the money has 2 choices.
He either buys stuff from me so that I can get the money I need to repay my debt, OR, if he does not, it is impossible for me to get the money to repay my debts, I default, the money poofs into non-existance.
It is impossible for me to get money to repay my debts if the person with the money will not spend it.
Got it?
Money as debt is a 2-way social contract that not ony requires the person in debt be willing to work to get money, but also requires the person with money be willing to spend in on the stuff the person with debt is laboring to create.
If the people with money refuse to spend it, then debt default is a mathmatical certainty. It is not a moral flaw of the person that wants to work to get money to repay their debt that the people with money refuse to buy. It is stupidity of the people with money that refuse to spend it, making debt collapse inevitable.
I’ve been thinking about your point on this for days. It seems to me like the conclusion of this means that it’s OK for the “winners” to hoard houses and land and cars and anything else they want to hoard…the economy will still function nicely. But if they choose to hoard the IOUs/USA stock certificates that we call dollars it screws up the system.
If that’s true, then it sounds like as much as some of us may dislike the Fed creating inflation, we NEED there to be an incentive such as inflation to keep “winners” continuously moving out of dollars into anything else.
Would you agree?
You are leaving out the simple fact that the entity you borrowed the money from has been deemed Too big to Fail and therefore they get paid back up front by the taxpayer. Everybody wins! Its amazing! Print, baby. Print.
What all you guys are leaving out is FRACTIONAL RESERVE BANKING. The money doesn’t exist. And what money does exist is loaned out a t 10 times the amount it actually has…………leverage. That’s the ticket baby. Makes Bankers and “speculators” rich.
The really big playerz, who speculated with CDO’s and MBS’s and traded really big deals leverage 30 and 40 to 1.
That’s why the system collapses. A minor drop of 1 to 2% completely wiped them out…….but.
we couldn’t let Goldman, and JPM, and Citi and all the PLAYERZ lose their gambles. It’s a one-way street. Free money for traders, paid for by the tax-payers with deflated dollar values.
MONEY, as currency, is at risk of collapse when everyone wants to hold their cash. You have to keep the game going because there isn’t enough “money” in the system to represent all the loans outstanding.
There is MUCH more debt than available currency.
If that’s the answer to my question, then I’m still not understanding something important. I do think I understand what you just said, but regardless of that, are you saying that we need to incentivize(?) people who are holding cash to spend it? All the way from The Boyz down to Apple down to my 401(k) money that’s sitting in a money market instead of in stocks?
No. That’s not what I am saying. I am saying that the system is unrealistically rigged to create “booms” and “busts”. That is what fractional reserve lending results in.
Saving is not a bad thing. It is withholding spending to invest in other, possibly more favorable or more profitable ventures.
Real savings it what allows economic expansion as money moves from savings to opportunities. Savings represent excess earnings. To have savings, you must have first produced something of value and then “stocked up” on a supply of your product that the money you hold supposedly represents.
Fractional reserve lending is a form of Fraud. It says you can spend money for things you haven’t stored away. You can borrow from the future, as our Congress regularly does, and pass the bill onto future generations.
The money created is more than the available products and services that can be claimed by it. That is how you can get a run on the bank. Everyone wants to cash out, but there are more debts than can be accounted for, by that I mean Paid for. It leads to collapse of the monetary system.
The only thing the FED can do is inject MORE money into the banks and the “system”, thereby diluting the value of all outstanding money. x dollars to by x goods, now x times y dollars to buy x goods.
The “system” needs to flush itself out to find PRICE Discovery.
What will people PAY for existing goods and services? What price will induce them to invest in the markets or buy stuff?
If they are not putting money in Stocks and Bonds, it’s because they either have no money to invest (tapped out) or, they perceive the price is already too high.
WE need government to stop trying to rig the game so we can figure out just what houses should be worth, given the current economic climate, and figure out how much deferred spending they should be doing to fund their future expenditures.
I am say FORGET STIMULUS. Depressions wipe out bad investments and make poor people out of speculators.
Goldman-Suchs and all the Banksters should be living in shanty-towns because they are ALL bankrupt. Those who didn’t play, but instead “saved” their money should be buying up their remaining assets (if any) at pennies on the dollar.
That is what should have happened, and by now, we would have an economic recovery with businesses starting new ventures having acquired property and equipment at bargain basement prices.
However, PiGMAN Hank Paulsen and his buddies in the rackets business would all lose their gravy-train retirement accounts, accrued by years of swindling the public. We just couldn’t have such a horrible thing happen to such wonderful people, so we abandoned capitalism: basic rules if you bet and win you get rich, if you bet and LOSE you get wiped out.
We let the FED fraudsters and their buddies in Congress save the BAD investments and pay with taxpayer money. No new businesses were started and the old bad businesses were supported with taxpayer bailouts.
Forget STIMULUS. Think Bankrupt Banksters. That is the solution.
Think Jamie Dimon and Lloyd Blankfein washing dishes just to earn a few dollars. The only jobs they are really qualified to do, based on the actual performance of their companies, without all the FED-sponsored Accounting Fraud.
at least Dio gets it. The Paulson-led bailout was the worst thing that could have happened to the real “recovery”.
Reality doesn’t make the rules. The Government (bank) makes the rules.
http://www.youtube.com/watch?v=y-AXTx4PcKI
Glengarry Glen Ross (movie by David Mamut) is another must-see flick that lays bare the cutthroat tactics of the REIC. The “Coffee is for closers” speech is soullessness at its best, as well as being a briliant performance by Alec Baldwin.
Although the movie is based on Mamut’s play by the same name, the director was James Foley.
He was previously best known for directing Madonna’s “Pappa Don’t Preach” video.
I stand corrected. Thank you, skroodle.
Another example of an honest borrower preyed upon by the evil banks.
BILLINGS, Mont.—Attorneys for Credit Suisse are due in federal court Thursday over accusations that the international banking giant arranged hundreds of millions of dollars in predatory loans with the goal of taking over luxury resorts in Montana, Idaho, Nevada and the Bahamas.
Plaintiffs backed by the founder of Montana’s ultra-exclusive Yellowstone Club, Tim Blixseth, are seeking billions of dollars in damages.
They claim Credit Suisse set up an offshore branch to skirt U.S. lending rules as part of a “loan to own” scheme, in which resorts were appraised at inflated prices then given loans they could not repay to force them into foreclosure.
Blixseth, who lives in Washington state, pocketed more than $200 million out of a $375 million loan Credit Suisse lined up for the club in 2005.
http://www.boston.com/news/nation/articles/2012/01/11/credit_suisse_in_court_over_loans_to_resorts/
“They claim Credit Suisse set up an offshore branch to skirt U.S. lending rules”
Since when does the U.S. have lending rules?
“……“loan to own” scheme…….”
That’s the motive of the Fed Reserve and every other Central Bank in the western world.
Submission through debt.
As economy improves, credit offers surge
Consumers tempted, annoyed by mailboxes full of come-ons
Promising everything from cash back to airline miles to zero percent interest for nearly two years, credit card companies mailed out an estimated 4 billion offers nationwide last year, nearly triple the amount delivered in 2009 and the most since 2007, according to Synovate, a unit of French market research firm Ipsos. That’s equivalent to a dozen applications for every man, woman, and child in the United States
http://www.boston.com/business/personalfinance/articles/2012/01/14/as_economy_improves_credit_offers_surge/?p1=News_links
Good grief. There were times this year when I would get three offers in a week from the same card program. It was beyond absurd. They all go in the shred box for the truck that comes twice a year. The free commercial shredder is the best benefit the village council provides. Better than the free shuttle bus.
You can stop them. Learn more at
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre17.shtm
It’s only good for five years as we found out last year. But registering again stopped the offers entirely in about a month.
CMBS anyone?
There’s something missing from the Hub’s office towers: workers.
At the close of 2011, Boston’s office buildings had fewer tenants than at the beginning of the year as companies forfeited office space amid economic uncertainty and cautious hiring.
A survey of 58 downtown office buildings by McCall & Almy found that of the 35.7 million square feet of space studied, 6.3 million square feet — or 17.6 percent — is vacant or expected to be. That’s the equivalent of nearly four empty John Hancock towers. One year ago, the Boston commercial brokerage firm reported 6 million square feet of space …
http://www.bizjournals.com/boston/print-edition/2012/01/06/tower-travails-boston-market-lacks.html
Irvine Company just broke ground for 1-mil square feet of new space near me…Others are going forward also…Although there appears to be fresh demand I also think that these big boys are trying to get out in front of the curve in a environment of really cheep money and suppressed labor cost…Although not nearly as crazy as the Dot.Com days it is similar in that the guys with the deep pockets are building without a tenant yet….
CMBS?
CMBS Delinquencies Pick Up, as Do Loss Severities
http://www.costar.com/News/Article/CMBS-Delinquencies-Pick-Up-as-Do-Loss-Severities/134883
from the article:
The December delinquency rate for U.S. commercial real estate loans packaged into CMBS rose seven basis points to 9.58%. After a positive November report that saw the delinquency rate fall 26 basis points, the rate reversed course and moved higher in December for the third time in the last four months and for the eighth time in 2011. The value of delinquent loans now stands at $58.5 billion, according to Trepp LLC, which said that further improvements will be hard to come by.
“We view this as the first of a six- to 12-month stretch where the rate could increase by 75 basis points in aggregate,” said Manus Clancy, senior managing director of Trepp. “This will come as a result of the first wave of 2007 originated loans reaching their balloon dates over the next few months.”
Recession is over, move along folks nothing to see here….
As the Teton County economy worsened in recent years, so, too, did the community’s health, according to a report released Monday.
The 2011 Community Health Assessment found ill effects of the economic downturn showing up in measures of health. Mental health is a growing concern, alcohol abuse continues to be a problem, and access to care is a challenge as residents lose health insurance or ration care, the report states.
For example, the county’s poverty rate shot up from 4.4 percent in 2008 to 9 percent in 2010, jobs disappeared, and Food Stamp participation more than doubled, the report states.
At the same time, the number of people without health insurance increased 10 percent from the previous survey, to 30 percent of county residents. Visits to the Teton Free Clinic doubled from 654 in 2008 to 1,219 in 2011, the report states.
http://www.jhnewsandguide.com/article.php?art_id=8126
So, I was watching the evening new last night and they kept “teasing” a story on “are you saving enough for retirement”. Since this is one of my pet peeves, I went ahead and watched.
The story says that “to maintain you income in retirement”, you need to save 5% per year if you start in your 20s, 10% if you start in your 30s and 25% if you do not start until your 40s, 45% if you start in 50s….
Interesting ** on the numbers…. I’ll get to after the basic math of this.
Let’s ignore for a moment that is it ABSOLUTELY impossible for every person in a net import nation to be saving money at the same time. (total goods and services bought must exactly equal all goods and services sold, so for one individual to sell more than they buy (accumulating money), someone else MUST be buying more than they sell by first borring the money into existance.)
If I save 5% of my income per year, for 40 years, that would be 2 years of income. 10% for 30 years is 3 years of income. 25% for 20 years is 5 years of income. 55% for 10 years is 5.5 years.
So, is this really what they are saying? That I need 2 years of income in the bank to retire, if I start saving in my 20s? Of course not.
The ** I spoke of was…. drumroll…….
** Assumes 8% annual rate of return on investments.
$50K income, 5% savings for 40 years, 8% annual rate of return: Total at retirement almost $750K. 8% rate of return = $59K a year in retirement.
30 years at 10% with the rest the same as above = $626k at retirement = $50K per year.
20 years at 25% of your income = $620K at retirement…
You get the point.
Now, I’ll point out, for these figures to have any meaning, you have to inflation adjust, so the 8% RoI is really 8% above inflation… or more like 10-11% assuming the Fed is able to hit the 2-3% target.
How is that working out?
I was born in 1967, so I was 20 in 1987. The Dow was at 2400 in 1987. Adjusted for CPI inflation, that is 4800. Assuming 8% above inflation rate of return for those 25 years, the DOW would have to be at 38,000 today.
To get to where the DOW actually is, 12,400, the ROI is more like 3.7% above inflation.
So, what does lowering the RoI to 3.7 over inflation do to the savings numbers they were touting on the “news”? Well, the caluclator I’m using alony allows whole % so let’s round to 4%.
$50K income, saving 5% for 40 years at 4% RoI = $250K savings. At 4% RoI that is $10K a year interest income.
The math simply does not match the reality.
Even if you managed to save 10% for 40 years at 4% over inflation, it is still only $500K at retirement, that gets you $20K income.
20% for 40 years at 4% gets you a cool million, which is $40K investment income, which finally matches the 80% of your income that you were spending.
I will now ignore the reality that teh only way we were able to acheive even 4% over inflation is because we were exploding debt at 3x the sustainable rate for the last 30+ years… so in reality, even that is not acheivable for today’s 20 year-old.
But, yeah….. If you have not saved for retirement, it is your own dang fault. Smaller government, rugged individualism, end Social security and Medicare…. We simply need to return to the days when you moved in with your kids and became a burden on them once you were too old to work…. then look the other way when the kids off their parents.
Now, let’s assume RoI over the next 40 years will be less than RoI over the last 25. Instead of rounding up to 4%, how about we round down to only 3% above inflation.
$50K income, save 20% for 40 years with RoI at 3% above inflation: total at retirement is $750K which at 3% above inflation is $22,500 at retirement, or half your income.
If everyone saved 20% of their income, then who would be able to afford over priced real estate?
High earners who saved up for it?
Darn those facts.
Seriously, Darrell. Thanks for running the numbers. I’ve heard similar stories recently and wondered what the numbers would say if fully analyzed. I suspected that it was just a way to try to scare people into starting early. Your analysis seems to confirm that. And when you are trying to encourage people to save starting in their 20’s, well, ignoring the complication of where paying off student loans should fall in their priorities is just silly. Maybe they expect a person with loans down around 3% to just ignore them and pay off with the schedule, but people with expensive loans should prioritize paying them off since it is a riskless rate of return.
I do wonder if they mean the 8% to be 8% over inflation. It could be that expected inflation is built into their assumptions. Maybe not, but perhaps. They also probably assume salary increasing over time which may have been very likely in the past and could be much less likely now. I’m also guessing that they are not really talking to the $50K a year household. Social Security replaces more of your yearly salary at lower salaries.
At this point (I’m about your age), I am saving a little more than a third and living on a little less than that. That is as far as I am willing to go at this point. Of course, I started a while ago, but nothing substantial in my 20’s. I was paying off law school loans back then.
At this point (I’m about your age), I am saving a little more than a third and living on a little less than that.
Just curious, polly: where does the other third go, or did I misread that?
SS, Medicare, federal income tax, state income tax, county income tax (part of which goes to the local village)
Ah, that makes sense now. Somehow I imagined you were talking gross income rather than net income.
I meant net rather than gross.
I might think that way, but my gross is a fairly round number (I add in the employer match in my 401(k) in that number) and my net is harder to figure out. I know my take home, but that has all sorts of things other than taxes taken out like flexible spending account, health insurance premiums, 401(k) contribution, pension contribution, etc. Income net of just taxes would take some calculating.
I’d also like to point out with respect to the original article, if you are saving 25% (or any other substantial amount) of your income toward retirement, once you retire, you don’t have to replace that portion of your income (or the taxes you are paying on it) once you are in retirement. I’d like to know exactly what they mean when they say “replace your income.” Do they actually mean replacing the income or replacing the income you need to replace the lifestyle you had on your previous income?
I am on my iPad, so I don’t have the ease to deeply review your post here. I apologize.
On the surface, I think you worry too much about the macro. Worry about your own situation. In 1987 you could have poured money into a Vanguard index fund, maybe $100 per month. I did not start into mutual funds or stocks until 1989 at age 30.
Most people keep carping about stocks as a poor investment and don’t even get the free money from company matching.
Maybe their losses are others gains. Losses by staying out of the markets.
The 10% average annual gain in the broad market since 1926 seems to counteract your implied zero sum argument.
“Most people keep carping about stocks as a poor investment and don’t even get the free money from company matching. “
Company matching is going away. Darrel’s point is that it will be much harder for today’s 20 year old’s to save for retirement.
Which is why people should not expect to retire at 65 given our lifespans.
Also another good reason to scrap social security. People could immediately save that extra money.
Also another good reason to scrap social security. People could immediately save that extra money.
BWAAAAHAHAHAHAHAHAHAHAHAAAAAAHAHAHAHAAAA!!!
That’s a good one.
How many people do you know who could actually save that extra money?
Would that money be saved or would prices simply rise because there was more to take?
I know every company would automatically give everyone a 7.5% raise.
Absolutely, not a single company would keep that money.
Retiring at 65 is so 1975. Retiring at 68 is more like it. Yeah only 3 years but the last 3 years of income could be the peak income for a professional.
The only caveat is the large amount of people who lived like cows in their 20s and beyond…eating, partying, staying out late, and not exercising. A minority of them will somehow make it to 70. But a majority of the people who took care of their own health will be able to work still at 70.
I am seeing more opportunities open up this year in my field. A headhunter yesterday told me 2012 will be a better year than 2011 and he has 50, even 60 hours per week contracts.
I tell myself I need a net worth of $3,000,000 before I could retire in a nicer part of California such as San Luis Obispo. Or I could retire now in a smoggy part of California where I grew up, such as Fresno. I’m a long way from $3,000,000, not to far away from $2,000,000.
Two seems like plenty—at an annuity-level return around 4%, that’s $80K/yr… Not bad for retirement.
Assuming we ever get back to historical returns, of course.
I can see why people might want to retire in a nice part of CA if they could afford it. There are many places I would rather be than a crappy part of CA, though. There are some really nice places in flyover that you could already live quite nicely.
Good for you.
However, it is not possible for everyone to be in that situation.
So, how much will you be “worth” when stock crash into depression and are then followed with hyper inflation?
I am more concerned about the economy as a whole, becasue what the individual does will be mostly irrelivant if we turn into France of say, 1787-1815.
Your $2 million is simply other peoples’ unrepayable debts. Congrats for accumulating so many other peoples’ unrepayable debts…. I hope they retain the value that you think they have.
I am not purely into stocks. After 40 one should also have treasuries, series I bonds, and physical precious metal.
Treasuries? Bonds? LOL!
Bill spent his entire adult life rootless and single, chasing jobs wherever they were. Nothing wrong with that, but hardly a model the rest of the country could reasonably follow.
I’m a long way from $3,000,000, not to far away from $2,000,000.
I’ve heard that after the first $1M the toughest thing is not losing your money to divorce, swindlers or taxes.
Which is why people should not expect to retire at 65 given our lifespans.
NON-sense. If you work in government, you can retire at 50, and collect a mothly check for the rest of your life. Why not take in an extra 15 years of “leisure”, at other people’s expense????? Think about it, if only $3000 a month, that would be an extra, half-million dollars for doing nothing. That beats the heck out of $225 per week in unemployment “benefits” everyone grips about.
You must be nuts.
Which is why people should not expect to retire at 65 given our lifespans.
Question to all. Lets say a person is 50 years old, does not like his job much and has 300-500k. Why should that person work hard until 70 then hope to retire and live well? He might not make it to 70 or he might lose his money to inflation or whatever. What if he wanted to chill for 10 or 15 years drawing down his money and having a good time or learning how to write or paint or some skill he can sell a little of later-and maybe living in his 50’s in a cheaper country like Nicaragua. Yea working on what he likes but not sweating it all the time because he might die anyway younger than the actuarial tables say he might. So then he turns 70 and needs to get a job at walMart or sell some of his art, craft of skill but he’s old and had a lot of fun the past 20 years anyway. Should he have had that fun or learning a new trick in his 50’s or 60’s or is the fun/learning better when you’re old?
Rio,
I’d rather get out early and take my chances and if I was single the scenario you painted would be awfully appealing to me.
What if he wanted to chill for 10 or 15 years drawing down his money and having a good time or learning how to write or paint or some skill he can sell a little of later
And be some deadbeat like Gauguin or Rousseau? What a waste.
I’m considering the same thing. I’m 48, and my job is killing me: high stress, harsher and harsher work environment, little time off. It pays well, and I am on my way to a reasonable retirement (self-funded) if I can stick it out another 5 or 10 years. But I see that my best remaining years to travel, be active and learn new things are right in front of me. I have several friends who are around ten years older than me who just fell apart in their early 50’s. If that’s going to happen to me, I want to have some fun *now*.
I have not thought much about going to a cheaper country. I am Canadian by citizenship, and thought about going back there for cheap health care, but other than that Canada is pretty expensive. Anyone have other ideas about cheaper countries?
I have not thought much about going to a cheaper country. I am Canadian by citizenship, and thought about going back there for cheap health care, but other than that Canada is pretty expensive. Anyone have other ideas about cheaper countries?
The “free” health-care alone in Canada for someone 50-65 years old make it a “cheap country” to live in for a Canadian citizen.
Darrell, I think that you’re missing a few things assumed in the show. First of all, I think that people who write these articles and TV shows assume that retirees will actually put their savings into an annuity which pays them an income until they die, with nothing left for the kids to inherit. So they wouldn’t just live off the interest. They would also consume the principle.
That touches on another point you made, that it’s not possible for everyone in America to be a saver. The retirees would be doing the opposite of saving. They would be spending the money that they saved in their working years.
TV shows and articles that present these numbers generally also assume that the income from these investments would be supplemented by Social Security. I don’t know if the show that you watched mentioned that.
One valid criticism of the show as you relate it would be the way the savings advice was based on decades = “10% if you start in your 30s and 25% if you do not start until your 40s,”, etc. If a person plans to retire at the age of 65, he has 25 years at age 40, but only 16 at age 49. That’s a big difference. I’ve heard the number is 20% for people starting at 40. Maybe 25% is for age 45, but it would be better to be more specific if you’re trying to educate people who have no idea about how to prepare for old age.
Even if you managed to save 10% for 40 years at 4% over inflation, it is still only $500K at retirement, that gets you $20K income………..
So, the solution is simple. You need a government job. You keep trying to figure out where all those advantages are for working in the Private Sector. You forgot about the big bonuses and raises that government workers don’t get. yea. You leave all that out.
I’m sure there’s a whole lot more money hiding somewhere for being in the “private sector”.
If you factor all that in, I’m sure you will get $50,000 to $70,000, like most of us government people are entitled to. And, of course, we get it, no matter what the “markets” do. If the markets go down, our retirement is guaranteed by the taxpayers.
Quit your private sector job, if you don’t like it, and work for the government.
I read articles like this about how much money was taken out of stocks last year, but I don’t see share prices adjust to reflect the withdrawals and general unpopularity of stocks; in fact, it seems as though the market is falling up again.
What gives?
JANUARY 9, 2012
Unpopularity Contest: Data Crunchers Disagree on Stock-Fund Withdrawals
By RACHEL LOUISE ENSIGN
Last year was grim for companies running U.S.-stock mutual funds, as investors pulled out billions of dollars more than they put in.
Everyone agrees about that. But they don’t agree on just how many billions investors pulled out. Depending on whom you ask, the figure through November was $115 billion…or $71 billion…or something in between.
What’s going on? Four of the big organizations that track fund numbers have different ways of counting outflows. The biggest figure comes from the fund-industry trade group, the Investment Company Institute, with the figure from data provider Strategic Insight following close behind. The low figure comes from researcher Lipper, a unit of Thomson Reuters Corp. Morningstar Inc. falls in the middle.
…
But no matter the methodology behind them, the flow figures for 2011 are ominous. All four sources agree that investors likely pulled out more dollars from U.S.-stock mutual funds than in any year except 2008.
“If you project the rate of flows from the first 11 months onto December, it’s going to be the second-worst year on record,” says Morningstar’s Mr. Flood.
…
corporate buybacks?
bingo
So where is this money going
1. Living expenses for the unemployed?
2. Stocks and ETFs
3. Gold and hard assets
Do people no longer have faith in the actively traded fund after seeing what Lehman and MF Global did? The PTB would love to dump losses on the average Joe, just as GS was creating crappy MBS investments selling them to clients and shorting the asset, you can bet that MF managers are being told to put money in things that may not be in the best interest of their clients. Not all of them are doing this but how do you know.
How the Fed missed the Housing Bubble.
http://finance.yahoo.com/news/inside-fed-2006-coming-crisis-124207691.html
It seems like the stock market is trying its best to crash, but some mysterious financial force is levitating the prices towards a permanently-high plateau.
I honestly did not realize until reading this article that more cash has left than entered stock mutual funds for five straight years. Why don’t the prices adjust downwards when so much money is yanked? It almost seems as though price fixing is involved, although if that were the case, I am sure it would soon be rooted out, as it would be a violation of the Sherman Antitrust Act.
Similar comments apply to housing: Since price fixing is illegal, it couldn’t persist for long without being rooted out by the Department of Justice.
Investors exit stock funds for 8th month in a row
January 13, 2012|Mark Jewell, AP Personal Finance Writer
The stock market ended up going nowhere in 2011 despite a bumpy ride, and investors continued to hit the exits. For the fifth year running, they withdrew more cash from stock mutual funds than they put in.
Bond funds continued to attract new cash. It reflects that investors are risk-averse after the Standard & Poor’s 500 index produced an average annual loss of 1 percent in the last decade, including dividend income. Volatility remains a big fear, with the 2008 financial crisis still a fresh memory.
“People look at stock returns, and see they have been poor for the past decade, and they don’t want to play the game anymore,’’ says David Santschi, executive vice president with TrimTabs Investment Research.
In 2011, the S&P 500 index ended up almost exactly where it started the year, although it returned 2.1 percent factoring in dividends.
It was a market that investors continued to shun. They withdrew a net $85 billion from U.S. stock funds last year, industry consultant Strategic Insight said on Friday. The string of annual net withdrawals extends to 2007. Over that stretch, investors have removed a net total of $328 billion.
Bond funds have attracted about twice that much in new cash in just the past three years, including last year’s net deposits of about $116 billion.
Before the financial crisis of 2008, it was common for stock funds to take in twice as much new cash as bond funds in any given month. That pattern briefly returned a year ago, when stock fund coffers grew for four consecutive months to start 2011.
But that streak ended in May, and worries about slower economic growth and the European debt crisis mounted over the summer and fall. Economic news turned more positive in December, but it wasn’t enough get investors back into stock funds.
Strategic Insight said investors withdrew a net $24 billion from U.S. stock funds in December, the eighth consecutive month with more money flowing out than in. Bond funds attracted $13 billion in new cash in December.
Investors also retreated from funds investing in foreign stocks. Net withdrawals from those funds totaled $11 billion in December. Still, foreign stock funds ended the year with net deposits of $34 billion, reflecting expectations that China and other emerging markets such as India and Brazil continue to have good long-term prospects.
Americans’ recent caution about money extends beyond their investment decisions. Over the first 11 months of last year, net deposits into checking and savings accounts were about eight times as big as the net total flowing into stock and bond mutual funds and exchange-traded funds, TrimTabs said on Friday.
…
Why would you think a bank-owned system (government/entire society) would be prone to manipulation/fabrication of “publicly” traded markets? That’s just crazy talk. Vote Mitt. Vote status quo. Vote O. Or just don’t vote at all.
There’s a (Chinese) lady who’s sure all that glitters is gold and she’s buying (and hoarding) a stairway to heaven…
China Hoarding of Gold Turns More Traders Bullish
http://www.bloomberg.com/news/2012-01-13/china-gold-hoarding-turns-traders-most-bullish-in-two-months-commodities.html
Gold traders are the most bullish in two months after mainland China imported the most metal ever from Hong Kong and investors bought U.S. bullion coins at the fastest pace in more than two years.
….Mainland China imported almost 102.8 metric tons in November, valued at about $5.4 billion…..Bullion rallied 6.2 percent since plunging to within 1 percentage point of a bear market on Dec. 29….Holdings (.GLDTONS) in exchange-traded products backed by the metal are heading for the biggest weekly expansion since mid-November and are within 2 percent of an all-time high, data compiled by Bloomberg show.
“The thing that’s caught people’s minds is the massive increase in Chinese buying,”……“Gold has demonstrated time and time again its ability to hold purchasing power. It looks expensive and people talk about bubbles, but it’s not.”
If you had a gazillion dollars worth of worthless monopoly money, what would YOU do with it?
Why that’s just crazy talk Liz.
I wish I could loan billions of $ to people who did not pay me back and still turn a record profit.
Housing bust still haunts the banks
JPMorgan Chase turns a record profit in 2011, but still feeling pain of housing bust
By Pallavi Gogoi
AP Business Writer | Associated Press – 16 hours ago
NEW YORK (AP) — The economy may be healing, but banks are suffering from a housing hangover.
JPMorgan Chase spent $3.2 billion last year to fight lawsuits, almost all of them over poorly written mortgages. That was down from $5.7 billion in 2010, but it made clear that housing still haunts the bank, five years after the bubble burst.
The bank said Friday that it set aside $528 million in the last three months of 2011 to fight lawsuits. It also spent $925 million in the fourth quarter to carry out foreclosures and handle mortgage defaults.
“There’s still a huge drag,” CEO Jamie Dimon said. “I mean, you’re talking about several billion dollars a year in mortgage alone.”
The bank’s higher litigation expense does not bode well for Bank of America, which has been damaged far more than JPMorgan from lawsuits related to mortgages. Last year, Bank of America agreed to pay close to $13 billion to settle mortgage issues.
The banks also face a mountain of lawsuits for documentation problems during home foreclosures. In December, Massachusetts sued five major banks, including JPMorgan, for deceptive foreclosure practices.
http://in.finance.yahoo.com/news/housing-bust-still-haunts-banks-182429029.html - 222k -
“I wish I could loan billions of $ to people who did not pay me back and still turn a record profit.”
That is the essence of too-big-to-fail, aka “privatize profits, socialize losses” banking policy.
Where do the major political candidates (besides Ron Paul) stand on this? I have heard nary a word out of the mouths of the Republicrats to address this.
Another “free” house goes bad.
Canceled TV show “Extreme Makeover: Home Edition” had role in Gilbert
Read more: http://www.azcentral.com/community/gilbert/articles/2012/01/12/20120112gilbert-canceled-tv-show-extreme-makeover-home-had-role.html#ixzz1jS43GaUs
On Friday night, ABC aired the final episode of “Extreme Makeover: Home Edition,” the reality TV show that captivated Valley viewers in 2005, when it transformed a struggling Gilbert family’s rented ranch house into a two-story, 5,300-square-foot dream home — complete with a full-size, electrically powered backyard carousel.
But financial woes spoiled the show’s fairy-tale ending, forcing the Okvath family — Bryan, Nichol and their seven children — to sell their one-time $1 million mansion for $540,000 in the spring of 2010.
http://www.azcentral.com/community/gilbert/articles/2012/01/12/20120112gilbert-canceled-tv-show-extreme-makeover-home-had-role.html#ixzz1jS3wpRtu
My kids were just looking at one of those house porn gloss magazines.
Oh look Dad - 8 bedrooms, 6 baths, all (faux) stone house on 6 acres. My bedroom will be in the tower! Double granite counter top islands in the kitchen!
We then had a discussion on property taxes, utility costs and upkeep. No - we can’t afford the house even if it was given to us for FREE in top condition.
I have enjoyed unlimited amounts of free house porn in the years since we moved to San Diego.
Yep…
Wonder what they did with ALL that money?
Utility bills skyrocketed, reaching $1,200 during the summer months; property taxes increased from $1,625 in 2005 to more than $4,100 in 2006.
Bryan, who was unemployed when the show was filmed, worked sporadically as a truck driver and fire fighter, but none of the jobs paid particularly well. Strapped, the couple used the house as collateral for a $405,000 loan in 2006, but payments on the adjustable-rate mortgage soon became unmanageable.
God forbid that anyone suggest many “victims” attain that status through their own poor choices.
“huge shadow inventory, estimated at between 1.6 to 1.9 million units.”
1.6 to 1.9 million x 10
The number of words written about the REO industry in 2011 makes ‘War and Peace’ seem like a Reader’s Digest short story. So what’s new for 2012? Good question … tough answer.
The actual number of REOs held by lenders and servicers is difficult to know. Fannie Mae, Freddie Mac, FHA and VA are required to disclose the number of properties they own, while the major banks do not make these numbers public.
No one knows what the future holds, but sadly I’m convinced that things will get worse before they get better. Maybe much worse. The underlying dynamics of the housing market are creating a ‘Perfect Storm.’ Lenders and servicers are taking back more REOs than they are selling, real unemployment is far higher than the ‘official’ number of 8.5%, more homeowners go ‘underwater’ every day, and property values nationwide are still falling. The original strategy of U.S. banks may have been to hold their REOs off the market until market conditions improved and property values started stabilizing, if not increasing. This is a failed strategy as evidenced by the huge shadow inventory, estimated at between 1.6 to 1.9 million units. Falling home prices generate more delinquencies, foreclosures and so-called ’strategic defaults.’ The impact of home modification programs has been negligible at best. And with a re-default rate on modifications between 60-70%, the net benefit of loan modifications is little more than a drop in the proverbial ‘bucket.’
http://www.nationalmortgagenews.com/blogs/reality/2012-REO-expectations-1028292-1.html -
Never trust a ReaItor. EVER
Can’t you at least trust them to lie?
Catch-22, Realtor™ style…
Realtors are like slinkies. They serve no useful purpose, but I always get the tee-hees when I push one down the stairs.
SCHWEET SS!
Answers from yesterday:
Rio, I agree with many of your positions but your continued support of the mighty O puzzles me. SV guy
I really only support Obama much on the inherited policies/debt thing. It’s mostly math and I think my position on his inherited debt thing is accurate. I don’t understand why people think W. Bush’s 2 wars combined with tax cuts for the rich (which they said would increase revenue LOL) are the cost responsibility of Obama.
In four years, are you going to tell us the next clown’s failures are all Obama’s? I think that’s called management by default. Blue Skye
No, because “all Obama’s” is a straw-man. All? I rarely use such absolutes. But I will say then, that any debt still being incurred by the two wars and the BushTaxCutsForTheRich were due to policies enacted by W. Bush. Why would I not relay the facts even 4 years from now?
It isn’t Obama’s fault, or Bush Jr’s or Clinton’s or Bush Sr’s or even Reagan’s?
The fault rests on every American that beleives the lies of politicians, votes for the person that tells you the best lies, and then failes to understand the reality that trade imbalances do not persist long-term.
The fault is of every one of us that fails to understand that money is just other peoples’ debts.
The fault rests on every American that beleives the lies of politicians,
This would mean the Constitution is garbage because it set us up as a Republic which by definition means the politicians HAVE the responsibility to represent their people in the best interests of the people and nation. The framers of the Constitution KNEW the general public’s limitations thus went with a Republic. It’s not nearly the people’s fault as much as the politicians. Like how was the general public to know the globalization promises were a LIE? How? How to know Iraq was a LIE? How?
Like how was the general public to know the globalization promises were a LIE? How? How to know Iraq was a LIE? How?
They could start by turning off the Tee Vee and seeking out real news and real truth.
They could start by turning off the Tee Vee and seeking out real news and real truth.
There were not enough voices contradicting the globalization push 20 years ago and there weren’t enough voices contradicting the Iraq War lie about a decade ago. The same can be said about deregulation and cutting taxes for the rich (to “create jobs”)
There is a difference in theory and practicality of what the American public “should” and are able to grasp on issues so cloaked, spun and complicated.
Who DIDN’T want to believe Colin Powell? The perfect pawn for that charade. I suspected as much, but it was only obvious once he *cough* “resigned.”
Rio,
I responded a little bit ago in yesterday’s bits & buckets.
I agreed with your statement. My belief is the WH is occupied by nothing more than a series of corporate/banker stooges.
But the tides are turning, as RP’s ascendancy shows. The nomination is almost assuredly out of reach but the winds of change, real fundamental change, are growing stronger by the day.
If as many people who said they’d vote for him, but won’t because it’s a “throwaway vote,” would just vote for him, their votes wouldn’t be thrown away.
Dateline Boston….2900 for mortgage, taxes and pmi, 500 for car, insurance and gas, 500 for utilities, insurance and sewer, 500 for student loans, 1400 for childcare (because you need two salaries to even play this game), that’s 5800 of after tax expenses. And you haunt even eaten yet…..let’s say low end you have 8000 in expenses all in a month…..or about 160000 in salary.
Question….
1. Where does that 20 percent a month come from for retirement
2. What percentage of people make 160k for the household.
3. Who the heck is gonna buy all these 600k houses?
…..the calculations only make sense in terms of affordability if you bought a house at the prices of 15 years ago. You are screwed if you buy now. Hence, prices will go back to the prices of 15 years ago.
I look forward to that, but there are no signs of it where the jobs are. There seems to be an infinite supply of people willing to sign up to be screwed.
Jane RE: your post below. Are they in Blacksburg or maybe Charlottesville? Other? Outside of the DC metro area VA real estate is relatively affordable but still overpriced. I don’t get buying something to live in the basement and possibly be a landlord with tenants overhead. Esp. Blacksburg and Charlottesville have lots of nice housing in town if they don’t want to commute far.
Have to tried to talk them to wait or look around a bit more. Or is the place really neat? Fair price, etc…?
Comment by jane
2012-01-13 03:51:04
Anybody have suggestions about finding a 1) house inspector, and 2) an appraiser with jaundiced views and cynical eyes about the market?
Eldest child is fully launched. Got Ph.D., gots steady job that she likes and from which she will never be canned, gots long term bf who is a genuinely good guy and outdoorsman. They are contentedly entrenched in their mid-sized VA university town, which they hope to never leave. They intend to stay in the basement apartment of their duplex, upon which they just put in an offer that was accepted. I, of course, am praying that a jaundiced inspector and appraiser will find issues (at retail) that are fixable (at wholesale). BF is handy and hardworking and I am close enough to act as day labor on a weekend.
Even at the accepted offer price, the numbers make sense, esp. with the long term tenant upstairs. The house is manageable without the tenant.
But I’d love to find a jaundiced inspector who has been around the block a couple times, and who is not afraid to call a spade a spade.
Thanks in advance!
Anon,
Kind of you to ask. You are correct in your surmise. The house is not the dream house, but the carrying costs work, and all of us - including kids - need projects upon which to focus our generative natures.
The house is cheap. With the tenant, PITI will be three days’ combined salary or thereabouts. That’s the driver. Given their habits and hobbies, I don’t see them blowing the surplus and they can handle the full shot on one salary or on UE. There is some talk about an eventual grandchild, at which time there may be a larger house in the offing. (I am not pressuring anybody into anything, as if I could. My comments run to “marriage is overrated, and children are great vehicles into which to sink surplus affection, attention, time and cash if you’ve got the surplus”).
The house sits next to walking trails (for dog) and near young people’s hangouts (for them). Neighboring acreage is in a preserve. Their trade-off is “little room, basement apartment” in exchange for “outdoors space, carrying costs, location”. I can empathize. I chose an apartment in the NOVA concrete jungle, trading off space for commute. I now need every minute of that time saved in commuting to study. But I don’t have the additional offsets of adjacent preserve, trails, woods etc.
Their basement apartment has a sheltered outdoor patio looking down into yard and into the woods of the preserve. Patio is usable for barbecuing and hanging out nine months a year. Convenient for the dog, dog house, run, and walking/running trails.
Negative - the apartment is cramped when all of us converge for holidays (it is the central location). In fact, we all do go a little batty. For another year, daughter is still in training and reluctant to take off a week at a time to do our traditional vacations and holidays at some beach or other. Generally, a rental house has plenty of space for all of us.
The kids are looking to me to scratch the itch for a larger homestead, but I am NOT buying a domicile suitable for holiday entertainment here in NOVA. In fact, I can’t wait to get the h*ll out of here, (to me) the aesthetic equivalent of Mumbai, but with the added disadvantage of HOAs. Tiny, scraped lots and mass-produced cr*pshacks built on sh*tty slabs that were thrown up with the understanding that they didn’t have to endure the indignities of winter, summer, rain, snow, square angles, plumb walls, or visual interest. Of course, at the right price, I would lower my standards - but those prices are not here yet. NOVA has economic vitality and I have a job that is not a McJob. I meet the “job” requirement with a low commute apartment, and compromise on everything else.
In sum, you are correct to sense that daughter’s house is a compromise. But it is a CHEAP compromise, serves the purpose of providing both of them a creative focus (handy guys need an outlet), and it is in an area that is liveable, to which we may all (myself and the other two sibs) eventually converge.
As the saying goes, we make plans and God laughs. Knock on wood.
Thank you again for asking.
Anon, I didn’t answer your question as it deserved, sorry. Why don’t they look somewhere in town.
It’s a quality of life choice. Here’s the thinking. Note the pontification, from thirty years of living in densely packed environments.
IMHO, people who live in urban areas in this country (and in their densely-packed surrounds) are, as a class, the least capable people in the world from the standpoint of practical knowledge. There are not all that many places where most of the population can make a living through arrant pontification and paper pushing, or from Section 8 and AFDC, but most of them are urban. Let’s face it - this ain’t the Renaissance anymore, and practical capability and self-reliance are irrelevant to an urban setting. You can hire anything, and the town has a dense enough tax base to support you if you can’t pontificate well enough to make a living at it.
In addition, the tax burden, as well as the crime, in any in-town area - including in Blacksburg and Charlottesville - will be higher than for its outlying rural area. So, you have to PAY more and RISK more to be jammed in with the incapable, and the pontificators.
Therefore, urban places (and their built-up suburbs, such as we have here in NOVA) are not a suitable life style choice for people with dogs, tools, barbecues, bicycles, canoes, and kayaks. Suits the builders - they can cram more sardines into the same space. Suits the denizens - they don’t know, and don’t want to know. Hence, over time, urbanized areas (and their densely packed suburbs) tend to breed nanny state mentalities.
Bf and daughter run the additional inconvenience of exploitation for free fixit services. Just wouldn’t be sustainable.
I tolja, I have become a pontificator. I sold out for the dough to put my kids through school without any of us incurring debt.
When I get out of here, I’m gonna go off the grid and live in a straw bale hobbit house I have built with my own two hands. The house will have a ginormous reconfigurable great room to accommodate holiday relatives and the occasional boomerang offspring. I’ll trust to the Almighty that global networks will have matured, that privacy will be a for-sale commodity, and that the boomerang offspring will therefore be able to proxy a seamless NOVA identity from a Podunk location.
Best, Jane
83-year-old sentenced to 21 years in prison for killing girlfriend
By Daphne Duret Palm Beach Post Staff Writer
3 hours ago
WEST PALM BEACH — When it came time for Alfred Infosino to ask a judge to spare him a life sentence, his attorney gingerly wheeled him up to a microphone, careful not to budge the jail-issued blanket wrapped around the frail 83-year-old’s chest.
With doctors only giving him six months to live, any prison sentence he received Friday for the October 2010 beating death of his companion Rita Chirel meant he will likely die in prison.
“She was a great gal,” Infosino told Circuit Judge Stephen Rapp of Chirel. “Part of what happened I still don’t understand.”
Rapp said he never doubted that Infosino was sorry for bludgeoning Chirel to death with a flashlight battery inside the suburban Delray Beach home they shared. But Rapp said the fact that a jury rejected Infosino’s insanity defense last year and convicted him of second-degree murder made the 21-year prison sentence he handed out a just decision.
Rapp’s sentence came over pleas for leniency from Infosino’s relatives, who described him as a gentle, kind man who they never knew to raise his voice until a bad reaction to an antidepressant led him on a downward spiral they said eventually led him to think Chirel, 77, was stealing from him, poisoning him and trying to drive him crazy.
Assistant State Attorney Slater asked Rapp to give Infosino a life sentence, reiterating the argument he made to jurors that the former attorney had acted out of rage on the morning he killed his companion.
Certainly Chirel pleaded for her life to be spared as Infosino pummeled her to death with a flashlight battery, Slater told Rapp. She received no mercy, Slater said, so neither should Infosino.
“On that morning, he ceded the right to die in peace with his family,” Slater said.
http://www.palmbeachpost.com/news/crime/83-year-old-sentenced-to-21-years-in-2100260.html -
Unfortunately, if you’re Bipolar an antidepressant can send you into full blown psychosis.
Our medical care is so primitave.
http://newyork.cbslocal.com/2012/01/12/homeless-long-island-teenager-is-intel-competition-semifinalist/
Nothing is sadder than unrealized human potential. I hope this determined teenager gets the assistance she needs to develop her gifts and abilities.
Blow-out in Boston (it appears)….
Comment by Realtors Are Liars®
2012-01-13 06:05:09
Denver will be smoked. Thoroughly.
————————————————————–
The red-assing of Denver has been accomplished and it’s only halftime.
The Center for Public Integrity / By Michael Hudson 30 COMMENTS
Fraud and Folly: The Untold Story of General Electric’s Subprime Debacle
The industrial giant jumped into the subprime business in 2004, lending blue-chip respectability to the market for risky home loans.
January 6, 2012 |
LIKE THIS ARTICLE ?
Join our mailing list:
Sign up to stay up to date on the latest Economy headlines via email.
The following story was first published by The Center for Public Integrity.
For General Electric Co., hawking subprime mortgages was a long way from making light bulbs and jet engines.
That didn’t stop the industrial giant from jumping into the subprime business in 2004, lending blue-chip respectability to the market for risky home loans by paying roughly half a billion dollars to buy California-based WMC Mortgage Corp.
What GE got in the bargain, former WMC employees say, was a place where erstwhile shoe salesmen, ex-strippers and even a former porn actress could sign on as sales reps and make big money pushing home loans. WMC’s top salespeople earned a million dollars a year or more and lived fast, swigging $1,000 bottles of Cristal and wheeling around in $100,000 Ferraris and Bentleys.
In pursuit of these riches and perks, several ex-employees claim, many WMC sales staffers embraced fraud as a tool for pushing through loans that borrowers couldn’t afford.
Dave Riedel, a former compliance manager at WMC, says sales reps intent on putting up big numbers used falsified paperwork, bogus income documentation and other tricks to get loans approved and sold off to Wall Street investors.
One WMC official, Riedel claims, went so far as to declare: “Fraud pays.”
How well did GE address WMC’s fraud problems?
GE says it did plenty to deal with the issue. Some ex-employees counter that GE officials didn’t do enough to rein in illicit practices, despite warnings from Riedel and other whistleblowers inside the lender. GE dispatched emissaries to look into the problem, the ex-employees say, but their efforts were too little, too late.
“They sent in people we thought were going to bring us back in the right direction,” Victor Argueta, a former risk analyst at WMC, says. “But it just never happened.”
By 2007, WMC was bleeding bad loans and red ink. General Electric shut the lender and reported related losses totaling more than $1 billion.
‘Everyone knew’
How could General Electric — a corporate icon voted America’s most admired company in 2006 and 2007 — have stumbled so badly?
The story of GE’s subprime misadventure has earned little attention from news media or public officials amid headlines about bank failures and mega-bailouts at other big companies. But now, with the aftershocks still being felt by GE and by WMC’s borrowers, lawsuits and former employees have begun to shed light on what happened and why.
It’s a tale of a 134-year-old industrial concern that’s transformed itself into a financial services juggernaut. It’s also a story about breakdowns in corporate compliance systems amid the chase to cash in on the latest innovations in high and low finance.
In interviews with iWatch News, eight former WMC employees claim WMC’s management ignored them when they reported loans supported by falsified documents, inflated incomes or other legerdemain. Two of them say they were transferred and demoted because they pressed too hard to expose corrupt practices.
Riedel, who worked as quality-control manager for the lender’s largest production division, claims that after he informed a GE official about fraud inside the lender, WMC’s management demoted him — reorganizing him out of his job, taking away his office and his staff and forcing him to sit at a desk for months without a job title.
“I didn’t have any files,” Riedel told iWatch News during a series of interviews. “I basically stared out a window.”
Two other former WMC employees confirm Riedel’s account of his transfer. “Everyone knew,” Argueta, the former risk analyst, says. “We all knew why he’d been moved to our section, from a nice comfy office out to the cubicles.”
General Electric didn’t answer questions from iWatch News about the accounts provided by Riedel and other ex-employees. It also declined to provide detailed answers to a series of questions about how much it knew about alleged fraud at the Burbank, Calif.-based lender and what steps it took to deal with it.
In a written statement, GE says that “following its acquisition by GE, WMC strengthened and expanded its compliance programs and standards. WMC held people to those standards. In those instances where WMC learned of violations of these standards, management took disciplinary action, including terminations of employment.”
‘All kinds of crazy loans’
WMC made a name for itself long before GE came courting.
Founded in 1955, it had been known for much of its life as Weyerhaeuser Mortgage, a subsidiary of the pulp and paper giant Weyerhaeuser Co.
By the late 1990s it had a new owner — billionaire financier Leon Black’s Apollo Management LP — and it had moved into the subprime game, spurring production by rolling out a “Race to the Top” program that gave top sales performers the use of Porsche Boxsters.
The push to book mortgage deals produced a rash of bad loans around the country. WMC claimed it had been victimized by on-the-ground fraudsters who’d used bogus appraisals and other deceits to get mortgages approved.
In Minnesota’s Twin Cities, however, so many WMC loans ended up in or near foreclosure that a local newspaper, the Star Tribune, suggested WMC had “self-inflicted some of its wounds by pushing too hard and fast” to sell loans. An assistant state attorney general told the paper that the company simply didn’t do “some of that due diligence” needed to ensure loan deals made sense.
“I have never seen a company that has been this aggressive,” one mortgage broker told the Star Tribune. “They were doing all kinds of crazy loans. They were doing anything they could do to push these deals through.”
Questions about WMC’s lending tactics were also raised by an academic study that looked at a pool of 5,610 loans the company had made around the country in 1998. By December 1999 almost 25 percent of the loans were facing foreclosure or were seriously delinquent — more than five times the rate for loans originated by other major subprime lenders, the study found.
GE, meet WMC
Despite these problems, WMC’s aggressive sales culture helped it survive and grow.
One of the forces behind its resurgence was Amy Brandt, who had gone from practicing law to peddling mortgages for WMC, quickly rising to become WMC’s No. 1 salesperson and then executive vice president of production. When she joined the executive team in 2000, she later told a business magazine, the company was on the verge of bankruptcy, and she helped lead what was, in her words, an “unbelievable turnaround story.”
By the end of 2003, Brandt was WMC’s president and chief operating officer, and the lender was producing $8 billion a year in subprime home loans and boasting profits of $140 million a year. It had also attracted the interest of General Electric, which was looking to grow in what, since 2001, had been a slow-moving economy.
“We’re going to have to turn up the engines to drive growth,” GE’s chairman, Jeffrey Immelt, told a TV interviewer in late 2003, explaining his company’s overall growth strategy. “The economy is not going to give you much, so what do you do?”
One of the things General Electric did was to seek profits in a home loan market that was rapidly heating up.
The big deal was announced in April 2004.
General Electric has never publicly disclosed the purchase price, but Apollo later revealed in securities filings that GE paid nearly $500 million for WMC, providing a nice profit for Black’s firm, which had paid less than $200 million for the lender seven years before.
GE asked Amy Brandt to stay on. She added CEO to her title. Internal documents obtained by iWatch News indicate GE promised the 31-year-old executive as much as $20 million in compensation over three years — including a $10 million upfront bonus at the closing of the deal.
General Electric declined to answer questions from iWatch News about the acquisition. It won’t say how much scrutiny it gave the lender before it closed the deal, or whether it was aware of WMC’s earlier fraud problems.
GE officials made it clear at the time that their regard for Brandt played a role in the company’s decision to buy WMC. “A big part of us doing the acquisition was Amy, no question about it,” a top GE executive told American Banker.
Immelt and other GE honchos thought so much of what Brandt had done with WMC, Businessweek later noted, they invited her to talk before the parent company’s top 600 executives at its annual leadership summit in Boca Raton, Fla.
As she left the stage, Immelt gave her a high five.
Tricks of the trade
Dave Riedel started at WMC soon after General Electric took over.
Riedel had experience in the banking industry as a real-estate appraiser, loan underwriter and, most recently, mortgage fraud investigations manager at Washington Mutual Bank. At WaMu, he claims, higher ups had told him to keep quiet when he’d tried to warn them about fraud-tainted loans streaming into the company’s mortgage pipeline.
With General Electric in charge, Riedel thought things would be different at WMC. He thought he’d get a chance to do his job and, he says, “catch the bad guys.”
He supervised a quality-control team of a dozen or more people who watched over WMC’s lending in a broad area of Southern California where salespeople were pushing subprime loans as well as “Alt-A” mortgages, another type of risky home loan.
The team, Riedel says, found many examples of fraud committed by in-house staffers or the independent mortgage brokers who helped bring in customers to the lender. These included faking proofs of loan applicants’ employment and faking verifications that would-be home buyers had been faithfully paying rent for years rather than, say, living with their parents.
Some employees also fabricated borrowers’ incomes by creating bogus W-2 tax forms, he says. Some, he says, did it old-school, cutting and pasting numbers from one photocopy to another. Others, he says, had software on their computers that allowed them to create W-2s from scratch.
‘Branded as a whistleblower’
In 2005, Riedel’s team became concerned about a sales manager who oversaw the funding of hundreds of loans a month. An audit of these loans, Riedel says, found that many of the deals showed evidence of fraud or other defects such as missing documents.
This wasn’t enough to get the sales manager fired. At most, Riedel says, the guy got a stern lecture.
“He became a little more shy. He wasn’t so flamboyant,” Riedel says. “But nothing changed.”
Later, during a sit down with a visiting GE compliance official, Riedel recalls, he described the audit and the response.
Over the next few days, Riedel claims, his career was thrown into tumult.
He says a WMC official countered by telling the GE representative that Riedel didn’t know what he was talking about and that the company had already been planning to demote him.
Riedel was stripped of his title, he says, and idled for months with no assignments and no staff.
A former WMC executive, who spoke on the condition of anonymity, says the fact that GE knew about Riedel’s concerns about fraud may have prevented WMC officials from firing him, but it didn’t stop them from putting him into corporate limbo.
“He was kind of branded as a whistleblower and not a team player,” the former executive says. “They didn’t exactly fire him. They just marginalized him and he didn’t really have anything to do.”
‘Business as usual’
While Dave Riedel was fighting battles inside WMC’s California headquarters, Gail Roman was losing battles on the other side of the country.
Roman worked as a loan auditor at WMC’s regional offices in Orangeburg, N.Y. She and other colleagues in quality control, she says, dug up persuasive evidence of inflated borrower incomes and other deceptions on loan applications.
It did little good. Management ignored their reports and approved the loans anyway, she says.
“They didn’t want to hear what you found,” Roman told iWatch News. “Even if you had enough documentation to show that there was fraud or questionable activity.”
If GE made any progress against fraud at WMC, Roman says, she didn’t notice it. Fraud was as bad at WMC in 2006 as it was when she started at the lender in 2004, she says.
“I didn’t really see much of a change,” Roman says.
Victor Argueta, the former risk analyst, says he didn’t see much change either.
Meetings would be held. Executives from GE would agree fraud was a problem and something needed to be done. “But the next month it was business as usual,” Argueta says.
Argueta was barely a year out of college, with an undergraduate economics degree from the University of Southern California, when he started at the lender in 2004. What he encountered, he recalls, wasn’t what he had expected to find at a branch of a top-flight Fortune 500 corporation.
Twenty-something salespeople with little education or mortgage experience ran the show, he says. They pulled in $250,000 to $350,000 a year while sales managers made $1 million or $2 million, thanks to generous production bonuses and the network of independent mortgage brokers that fed the lender business.
“We had ex-strippers working there,” Argueta says. “The whole point was to have someone attractive to talk to the brokers. One of the salespeople did porn before she worked there. When someone told me that, I couldn’t believe it. Then I saw the video and I realized it was true.”
Argueta says one top sales staffer escaped punishment even though it was common knowledge he was using his computer to create fake documents to bolster applicants’ chances of getting approved.
“Bank statements, W-2s, you name it, pretty much anything that goes into a file,” Argueta says. “Anything to make the loan look better than what was the real story.”
In one instance, Argueta says, he sniffed out salespeople who were putting down fake jobs on borrowers’ loan applications — even listing their own cell phone numbers so they could pose as the borrowers’ supervisors and “confirm” that the borrowers were working at the made-up employers.
Management gave him a pat on the back for pointing out the problem, he says, but did nothing about the salespeople he accused of using devious methods to make borrowers appear gainfully employed.
Nightmare loans
Roman and Argueta weren’t alone in their concerns, according to other ex-employees who spoke on the condition they remain anonymous, because they still work in banking and fear being blackballed within the industry.
“It was ugly,” one former fraud investigator at WMC recalls. “I would have nightmares about some of the things I’d find in a file. I’d wake up in the middle of the night going, ‘Oh my God, how did this happen?’ ”
A former manager who worked for WMC in California claims that company officials transferred and essentially demoted her after she complained about fraud, including the handiwork of a sales rep who used an X-Acto knife to create bogus documents, cutting numbers from one piece of paper and pasting them onto another, then running the mock-up through a photocopier.
“They knew I had a lot of crap on them and I wasn’t going to shut up,” she says. “And the easiest way was to pay me off. Create a job where I could just sit and collect my money.”
Both Riedel and another former WMC employee confirm the woman’s account.
Two other ex-employees say that, in their experience, WMC managers didn’t condone fraud. When he identified fraud-tainted loans, one of the two recalls, his managers killed them.
Both add, though, that the lender did push loans that were likely to land borrowers in trouble in the long run. The desire to keep sales numbers growing often trumped good judgment, the other ex-employee recalls. “It was like hitting your head against a brick wall, trying to make sure the right thing was done,” she says.
‘Fraud pays’
By early 2006, Dave Riedel had begun to rebuild his career inside WMC.
He helped put together a presentation in May 2006 aimed at giving GE officials a sense of how serious WMC’s fraud problems were. Riedel says an audit of soured loans that investors had asked WMC to repurchase indicated that 78 percent of them had been fraudulent; nearly four out of five of the loan applications backing these mortgages had contained misrepresentations about borrowers’ incomes or employment.
Riedel also helped work on a computer program designed to dig out fraud across the company’s loan portfolio. It sifted through a swarm of data, including evidence that many borrowers submitted multiple applications with income figures that mysteriously grew from one application to the next. Then it spit out a fraud alert flagging applications that appeared to have false information.
Riedel hoped that the company would use the data-tracking program on a real-time, wide-scale basis, he says.
It was at a meeting about the computer program, Riedel says, that an executive declared “fraud pays” — explaining that it didn’t make sense to slow the gush of loans going through the company’s pipeline, because losses due to fraud were small compared to the money the lender was making from selling huge volumes of loans.
The anti-fraud algorithm was never put into regular use, Riedel says.
Final days
In October 2006, Dave Riedel changed his computer password to “finaldays107!” — reflecting his expectation the company would be out of business by October 2007 (10-7).
As home values were starting to fall and subprime loan defaults were starting to rise across the industry in late 2006, Amy Brandt stepped down as WMC’s top executive. She told a trade publication that her contract with GE was ending and, rather than re-enlist, it was time for her “to move on.”
“This was really my baby, and I wanted to wrap up this era because I really love the company,” Brandt explained.
By the spring of 2007, problems in the subprime mortgage market had grown more serious. Borrower defaults and investor alarm had spun the mortgage industry into chaos. In the first half of the year, WMC lost more than a half-billion dollars.
GE officials blamed the mortgage market’s swoon for WMC’s problems. In mid-July, GE revealed it had entered what its chairman, Immelt, described as an “active exit process.” Immelt told investors his company decided to end its three-year subprime experiment because “we just had too many other better choices. And I just think we wanted to get this off the table vis-a-vis the things that investors have to think about with GE.”
Along with taking an immediate hit to its balance sheet, GE also set aside hundreds of millions of dollars to cover investors’ demands that it buy back defective WMC loans.
By October 2007 — as Riedel had predicted — WMC Mortgage was effectively out of business, dead after having pumped out roughly $110 billion in subprime and “Alt-A” loans under GE’s watch, according to industry data tracker Inside Mortgage Finance.
‘Living it up’
And Amy Brandt?
She was “living it up,” at least according to Businessweek.
WMC’s former CEO had a 30-acre ranch outside Los Angeles where she kept a dozen horses. She’d used some of the millions she’d earned at the lender, the magazine said, to start an independent record label, YMA Music Group, which signed such artists as former Limp Bizkit guitarist Wes Borland. She’d also become CEO of Vantium Capital, a private equity fund that planned to make money off distressed mortgages.
Brandt told Businessweek that, looking back, she wished she’d done more to diversify the kinds of loans WMC made.
“We were too aggressive in some areas,” she said.
Others agreed that WMC had been too aggressive in its lending practices.
A study by federal regulators, “Worst Ten in the Worst Ten,” found WMC’s loans accounted for the second-highest number of foreclosures on subprime and “Alt-A” mortgages in the nation’s 10 hardest-hit foreclosure hotspots, trailing only New Century Financial.
In the Fort Pierce-Port St. Lucie area in Florida, for example, 47 percent of the loans WMC booked from 2005 through 2007 had ended up in foreclosure as of late 2009, the study found.
Washington State banking regulators accused WMC, Brandt and two other WMC executives of “deceptive and unfair practices.” The regulators claimed the lender failed to make sure all borrowers received legally required disclosures, including paperwork that reported how much they would be paying on their loans.
WMC reached a consent order with the agency that included modest cash payments to a few borrowers. It didn’t acknowledge wrongdoing.
Brandt told iWatch News she couldn’t comment on the state regulators’ allegations or answer other questions about her time at the lender.
One former employee, who spoke on the condition her name not be used, says she believes Brandt “was so far removed from daily operations that she probably didn’t know” how bad fraud was inside the company.
‘Stunning failure rate’
Mortgage investors also are taking a closer look at WMC’s practices.
A review of a $550 million pool of mortgages booked by WMC and another subprime lender, EquiFirst, found inflated borrower incomes, missing documents and other “material breaches” in 150 loan files out of a sample of 200 — a “stunning 75 percent failure rate,” according to an investor lawsuit filed in September in federal court in Minnesota.
One of the defective WMC loans, the suit claims, was supported by paperwork that said the borrower earned almost $180,000 a year doing “account analysis.” The borrower’s tax returns, the suit says, showed he actually made less than $20,000 per year driving a taxi.
GE told iWatch News that it will “vigorously defend” itself against the lawsuit. It says the suit’s claims are “based upon a flawed statistical sampling of a small number of loans.”
The Federal Housing Finance Agency, meanwhile, charges that General Electric misled investors in the sale of hundreds of millions of dollars in securities backed by WMC mortgages.
The agency’s lawsuit claims GE didn’t tell the truth about how well WMC followed its loan underwriting guidelines, or about how much borrowers owed on their homes or whether they intended to live in them or use them as investment properties.
GE denies the allegations, and insists that Freddie Mac, which invested in the securities, made out well on the deals.
On the record
Dave Riedel no longer reads the financial news. When someone brings up the mortgage crisis at a party, offering opinions about what happened and why, he keeps his mouth shut. Talking about it makes his blood pressure rise.
After WMC closed, he spent almost two years looking for work before he found a sales job outside the banking industry. Nobody in the banking business was interested in hiring him.
Of the 40 best fraud investigators he knows, Riedel estimates that maybe four of them still have jobs in banking. Meanwhile, he says, bureaucrats without the talent or temperament for fighting corruption have snapped up choice fraud-control jobs at many big banks.
Despite his desire to put his mortgage days behind him, he says he felt an obligation, when iWatch News contacted him, to tell what he knew.
Later, he had second thoughts, worrying there might be blowback against him for talking about what happened inside WMC and GE, even if he stuck to facts rather than opinion. He asked his comments be put “off the record.” When he was told it wasn’t possible to go off the record after the fact, he made peace with going public.
“I have an ethical problem with covering things up,” Riedel says.
Given a chance, he adds, he’d be willing to talk to the FBI about what he uncovered during his time at WMC.
The feds should be turning over rocks, he believes, across the mortgage industry. People who committed or condoned fraud and helped crash the economy, he says, need to be held accountable.
“I can’t tell you who broke the law and who should or shouldn’t go to jail,” he says. “But I can tell you that these people should have to answer to somebody about what happened.”
This story was reprinted by permission from the Center for Public Integrity.
Michael Hudson covers business and finance for The Center for Public Integrity. He previously worked as a reporter for the Wall Street Journal and as an investigator for the Center for Responsible Lending.
2
digg
Share
30 COMMENTS
AAA
LIKED THIS ARTICLE? JOIN OUR EMAIL LIST
Stay up to date with the latest Economy headlines via email
See more stories tagged with: ge, mortgage, home loans
http://www.alternet.org/economy/153679/fraud_and_folly:_the_untold_story_of_general_electric’s_subprime_debacle/