Bits Bucket for January 29, 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.
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Name:Ben Jones
Location:Northern Arizona, United States
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As aid access eases in foreclosure crisis, barriers foil homeowners
By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 9:33 p.m. Saturday, Jan. 28, 2012
Three months after the Obama administration announced a revolutionary refinance plan for severely underwater homeowners, most borrowers are still unable to apply.
The automated systems are set to reject refinances on loans where the borrower owes more than 25 percent on the loan over what the home is worth - the limit under the old federal Home Affordable Refinance Program .
HARP 2.0, as the new program is sometimes called, has no cap for most refinances.
President Obama announced another new refinance program during last week’s State of the Union address that would allow privately held underwater mortgages to refinance.
The proposal, which would require approval from Congress, could save homeowners about $3,000 a year on their mortgage, Obama said.
“No more red tape. No more runaround from the banks,” he pledged.
To qualify for HARP 2.0, borrowers must be current on payments, have no late payments in the past six months and no more than one late payment in the past 12 months.
(I`ll go along with that, but it aint gonna help much)
http://www.palmbeachpost.com/money/foreclosures/as-aid-access-eases-in-foreclosure-crisis-barriers-2133127.html?printArticle=y -
Oddly, nothing seemed to work correctly in Idiocracy either.
It’s like they’re using BRAWNDO for everything, these days. It’s what the economy craves!
This is playing out exactly like this scene:
“Would you like another EXTRA BIG ASS fries?”
“I said I didn’t get any!”
“Thank you. Your account has been charged.”
I propose a program called HEMP, Helping Every Moron Proliferate, in which anyone who has shown exemplary greed, laziness, and incompetence is rewarded with principal reduction of at least 50%, because they need it, and anyone who has shown a work ethic and wisdom with their finances is punished by having to pay for this program, because they can afford it.
Help Every Moron Profit
Debtination, you missed a huge opportunity here:
HEMP–
A plan to help underwater homoaners afford their mortgages by converting their homes to grow houses.
“If the loan is ineligible with Fannie, then you are underwriting it at your own risk, and it’s that risk that no one is willing to take,” said Tina Mulligan, vice president of the Florida Association of Mortgage Professionals. “You won’t see many applications being taken until probably after March 1.”
Meanwhile on the Gulf coast…
http://www.heraldtribune.com/article/20120128/COLUMNIST/120129477/2416/NEWS?Title=Agents-say-buyers-are-pouring-in
‘ “We are in a whole new market,” she said. “Un-buh-lievable. People are here and I am showing my top listings. The Canadians are crazy. Really big money is coming … smart money is starting to pull the trigger.”
‘ Ogilvie, who works with her husband, Michael, doesn’t claim to have all the answers as to why the market is starting to cook. She just knows that her phone is ringing and her car is full of new people with deep pockets.’
BNOBPOF?
Sounds like all the announcements out of DC about renewed efforts to use federal tax dollars to reflate the bubble have caught the attention of Canadian investors. Makes sense to me: Why not be on the receiving end of taxpayer-financed boondoggles if you can work it out?
So have the rich decided that its time to snap up assets on the cheap? Or are these “deep pockets” really just wannabes spending borrowed money?
And how many houses are they really buying?
To me this article is probably just hype to prime local suckers into buying.
“I took my own advice,” she said. “When our house came on the market, we priced it at $350,000 and sold it to the first person at $335,000.” That was in August 2011. - Oglivie
In othere words smart money is cashing out.
No mention of Olgivie trading up. Maybe trading down to a rental?
Is the eurozone crisis ‘contained,’ at least so far as the US economy is concerned? And what is the color of the eurozone’s money, btw?
Officials stress importance of euro zone firewall
By Polya Lesova • MarketWatch |
Posted: Sunday, January 29, 2012 12:00 am
DAVOS, Switzerland • Firewall was once again the buzzword in discussions on the eurozone debt crisis at the World Economic Forum’s annual meeting on Saturday, with several senior officials from around the globe urging Europe to reinforce its defenses.
Japan, meanwhile, said it stands ready to help the eurozone, while the U.K. said it will consider increasing its contribution to the International Monetary Fund if the eurozone committed to a bigger firewall.
The call for the eurozone to put more money in its rescue funds has been a running theme in Davos this past week and comes ahead of Monday’s summit of European Union leaders in Brussels. U.S. Treasury Secretary Timothy Geithner and British Prime Minister David Cameron urged Europe to boost its firewall last week.
Those calls grew on Saturday at a panel discussion here on the global economic outlook.
“It’s critical that eurozone members develop a clear, simple firewall … to provide trust,” said Christine Lagarde, managing director of the International Monetary Fund. If the firewall is big enough, she said, it will not get used.
“No one is immune in the current situation,” she warned.
Lagarde was reiterating her stance on the eurozone crisis, which she outlined in a speech in Berlin earlier last week. The IMF is currently aiming to raise up to $500 billion in additional lending resources, so it is better equipped to respond to the euro crisis and deal with other emergencies.
At the same discussion in Davos, British Chancellor George Osborne said Britain will think seriously about providing further resources to the IMF if the eurozone boosts its firewall. “The eurozone needs to provide a significant increase in available resources,” Osborne said. The U.K. will not be willing to contribute more to the IMF “unless we see the color of their (the eurozone’s) money,” he said.
…
SO, is “firewall” a nice way of saying “people that made stupid loans to people that can’t pay it back, get to pass the loss on to someone else”?
Ha!
And here eyes thought it was like this:
We need to have a this “firewall” in the rare “event” there is an “emergency”, iffin’ there really is an “emergency”, we’re all agreed it’ll be just enough to help those who grab 1st or until the “firewall”-$upplies run out.
Just like Sunday morning breakfast:
“1st come, 1st $erved!”
“unless we see the color of their (the eurozone’s) money,”
I reckon many euro citizen’s don’t carry their wallet$ & purse$ when visiting London and other UK destinations$.
(Not only will they not be able to see their colorful euro monie$, they won’t be able to touch it with their fingers either)
Occupy Rick Santorum
Questioning access to those who represent us or simple class warfare? I would have enjoyed going just to see who’s lining the campaign coffers and then matching them up with mayoral decision making.
Occupy Syracuse protests at Mayor’s Ball
Syracuse, NY — Inside the Landmark Theatre tonight, supporters of Syracuse Mayor Stephanie Miner attended a ball to raise money for her 2013 re-election campaign. Tickets ranged from $250 to $1,000 a plate.
Outside the theatre, on South Salina Street, Occupy Syracuse protesters held their own ball and stood in the rain and wind dressed in old suits and prom dresses. No tickets were needed, but participants were asked to bring a food donation for the homeless.
“The mayor, for her own re-election, is offering an event where you pay $1,000 and you get to spend some time with her and most of the people in Syracuse can not afford something like that,” said Ryan O’Hara, a member of Occupy Syracuse. “Who is going to be her constituency if she is re-elected? It is going to be the people of Syracuse or is it going to be whoever has the money to see her through her next campaign?”
Why bother?
Yeah, protest the campaign finances of the Mayor of Syracuse or positions like this below:
‘That paper envisions a very powerful executive branch, under the Speaker’s leadership, that wields the power to issue final determinations regarding constitutional issues. Such an arrogation of power threatens the rule of law upon which our free and democratic government is founded.’
Are these protesters not watching the debates, where these guys talk about torture and endless undeclared wars like they are nothing? The neocons are dragging our country into another war right now! And these people are gonna stand around in the rain in prom dresses?
I did watch some videos of Oakland Occupy protests last night. They are a little heavy on the commie stuff but at least they fight back.
I can tell you right now the Syracuse group is not going to embrace the bigger picture. They are simply questioning if the locals are represented when big money from outside of Syracuse is influencing the candidate w/contributions probably for the sake of their businesses. Mayor Stephanie Miner’s husband, for example, was just rewarded with one of the city’s major contracts.
It may seem like small potatoes but it’s a microcosm of what we argue is going on in Washington when we say the lobbyists control our government. Plus we’re talking about 10 people here. This is not a major movement. It’s just a handful of people asking questions we all talk about here. At least they collected a canned food drive for the needy at the same time.
I realize the need to fight the good fight on every level. It just seems like this occupy thing has less meaning every day. Here in Flagstaff, some of these folks sent out an facebook message that they were going to ‘occupy’ the courthouse in 2 hours. How many can drop everything for that? And then, get this, they didn’t show up!
On the food drive; why when we spend more on the military than the rest of the world combined are we collecting cans of food? Yesterday I was working in a part of town that has a food bank. When I drove by there were dozens of men sitting around waiting, looking pretty dejected. Now let me bring in this from one of PBs comments:
‘in addition to the $700 billion Troubled Asset Relief Program (TARP); the $7 trillion in loans to the banks from the Federal Reserve; and (here’s a biggie)
‘…the Fed’s zero-interest-rate policy, which allows banks to borrow from the Fed at zero percent while investing in U.S. Treasury bonds at 4 percent’
This last part not only gives risk free billions to the fattest cats, but has another serious effect. It means the federal govt doesn’t need you or me or anyone. They can allow the Fed to print what they need, wall street will buy their bonds and off they go. IMO, it’s this reckless unaccountability that is responsible for the mess we are in.
“This last part not only gives risk free billions to the fattest cats, but has another serious effect. It means the federal govt doesn’t need you or me or anyone. They can allow the Fed to print what they need, wall street will buy their bonds and off they go. IMO, it’s this reckless unaccountability that is responsible for the mess we are in.”
Very much agreed. I’ll keep shouting from the rooftops until I or they are done,.. END THE FED!
“They can allow the Fed to print what they need, wall street will buy their bonds and off they go.”
As long as the Fed is willing to use its printing press as a fiscal bazooka, who needs taxes?
“The neocons are dragging our country into another war right now!”
“Reduce-The-Deficit-Now! … Today!”
Is it just Hwy50, or does anyone else sense a “conundrum”?
I sense a no-bid contract.
What color will the next Halliburton-Sherwin-Williams foreign-invaded-city $afety zone be? How many gallons? Who’s gonna paint the lines & at what $alary? Who’s gonna guard xe painters? $hould we hire local$ and provide a Big Mac quarter-pounder, $uper $ized of course or hire private chef$ for “culturally correct” cuisine?
(Geez, there so much to consider in these “Nation Building” escapade$, eyes in “$hock & Awe$” that it can possibly even result in a “mi$$ion accomplished!”)
And where are the evangelicals in all this? They’re still harrassing women coming out of the gynocologists office.
So much for evangelicals being pro-life. Nothing but silence from them on the wars.
Any of you lardos storm Oakland City Hall yesterday and burn the flag in protest of the 1%? Thought so. Corzine must be laughing his ass off at you clowns.
Well, grenada, I’m sure your attempt to offend would have succeeded if anyone could understand what you are trying to say.
“conundrum”?
No; I see a smoke screen for the man behind the curtain.
The WarVangelists are no more pro-life than Bin Laden.
There should be an alternate to the “Hitler rule”, one in which he who brings up Bin Laden to make a case automatically loses.
‘There should be an alternate to the “Hitler rule”,…’
For Pete’s sake — some times the Hitler rule is completely appropriate.
Case in point: A presidential candidate proposes to weaken the Supreme Court in order to assume dictatorial powers.
A sitting president tried it about 75 years ago.
All politics is local, Ben. We have to start somewhere to get people involved in a way that affects them personally– then let it build from there. “Community organizing” they call it….
The chance of you or I personally changing anything in Washington is minimal, but we can certainly make a difference in our cities and our counties (and here on the internet.) And when enough of us do that, our Congressional representatives listen.
Is unbridled executive branch power what the country wants or needs at this juncture in history? Scary…
Gingrich’s whitepaper seeks to dismantle the rule of law
Published: Sunday, Jan. 29, 2012 12:32 a.m. MST
By Rodney K. Smith
Former U.S. House Speaker Gingrich announced during his recent comments after winning the South Carolina primary that a centerpiece of his campaign is his whitepaper, “Bringing the Courts Back Under the Constitution.” That paper envisions a very powerful executive branch, under the Speaker’s leadership, that wields the power to issue final determinations regarding constitutional issues.
Such an arrogation of power threatens the rule of law upon which our free and democratic government is founded.
In that whitepaper, Gingrich declares, “A Gingrich administration will use any appropriate executive branch powers by itself and acting in coordination with the legislative branch to check and balance any Supreme Court decision it believes to be fundamentally unconstitutional and to rein in federal judge(s).”
And, if necessary, Gingrich would direct the United States Marshal’s Office to bring judges with whom he disagrees before Congress to explain their decisions.
…
Apparently Gingrich has not read the Constitution.
As bizzare as it seems, I couldn’t imagine many Americans objecting to this.
What he has seen is that the people in this country won’t stand up for they’re own rights. Heck, they’ll cheer when he talks about torture and killing. And don’t leave out the other side. The current “commander-in-chief” starts wars and has said straight out, congress has no say anymore.
What else can we expect? We leave the door open to total control by one person and they take it. Now they don’t even put up a nice front before being elected; they tell us how dictatorial they’ll be in the primaries!
they tell us how dictatorial they’ll be in the primaries
which they go on to win!
(Shudder)
‘which they go on to win’
Calling themselves a conservative. Not only that, but insisting they are the definition of conservative. This is just one reason why I don’t buy into these false dualisms. Liberal and conservative are meaningless when there is no agreement on what the heck these terms mean. And actually, the people who wear these labels are just different shades of the same color.
An example:
‘For the Left, the big news of the New Hampsire primary has been greeted with an embarrassed silence. For there the progressive wing of the Democratic Party, for example “Progressive” Democrats of America, failed completely to put forward a candidate for peace. This failure was not unexpected since the candidate of the progressives was and is Barack Obama who is out-Bushing Bush in the war and empire department.’
‘Nor did the wing of the progressive peace movement not formally associated with the Democratic Party raise its voice in any discernible way in New Hampshire. Here is a primary which is carefully watched in a state small enough so that a grassroots effort cam have a genuine effect and reverse the tide of war as happened in 1968 and 1952. Where were UFPJ, Veterans for Peace, Peace Action, Code Pink? Missing in action. What an abject failure, a profound indictment of what is called the “Peace and Justice” movement.’
http://www.antiwar.com/blog/2012/01/20/progressives-cover-themselves-with-shame-in-nh-primary/
“..out-Bushing Bush..”
LOL
“…they tell us how dictatorial they’ll be in the primaries!”
Didn’t Hitler pretty much do the same thing before taking over as dictator in Germany?
Does Ben think the filibuster rule in Senate weakens or strengthens the power of Congress relative to the power of the President?
How about the general makeup of the Senate? Majority of the House of Representatives from large urban areas, majority of Senators from rural areas? No constitutional amendment will ever pass to remedy this. Perhaps all states race to break up into smaller states. We will have a crisis if Wyoming and Alaska try to split.
The Supreme Court having the final say over matters of Constitutionality is not in the text of the Constitution. SC grabbed that power in Marbury vs Madison in 1803.
“SC grabbed that power…”
And may they long keep it. The thought of Newt as dictator-in-chief gives me the heebie-jeebies.
‘John Roberts has made his decision, now let him enforce it!”
According to Remini, Jackson never said this, as the quote first appeared in Horace Greeley’s The American Conflict in 1864.[44][45]
http://en.wikipedia.org/wiki/Andrew_Jackson
“SC grabbed that power…”
These judges figured that the Constitution was the highest law in the land. I’m having trouble finding fault in that.
“would direct the United States Marshal’s Office to bring judges with whom he disagrees before Congress to explain their decisions.”
Early morning coffee + dreaded remembrances of Taney, oh great Scott!:
Despite the fact that the decision is no longer “jurisprudentially important,” it nevertheless had, and continues to have, lasting cultural and historical ramification/implications.
The Opinion of the Court, written by Chief Justice Roger B. Taney, was, and remains, extremely controversial: legal scholars of diametrically opposed jurisprudence do not debate whether or not the decision was wrong, but rather why it is wrong.
The decision was 7–2, and every Justice besides Taney wrote a separate concurrence or dissent. For the first time since Marbury v. Madison, the Court held an Act of Congress to be unconstitutional. The decision began by first concluding that the Court lacked jurisdiction in the matter because Dred Scott had no standing to sue in Court, as Scott, and all people of African descent for that matter, were found not to be citizens of the United States. This decision was contrary to the practice of numerous states at the time, particularly Free states, where freed slaves did in fact enjoy the rights of citizens, such as the right to vote and hold public office.
The decision of the court is often criticized as being obiter dictum because the Court went on to conclude that Congress had no authority to prohibit slavery in federal territories and that, because slaves were not citizens, they could not sue in court. Furthermore, the Court ruled that slaves, as chattels or private property, could not be taken away from their owners without due process.
In reaching this decision, Taney had hoped to settle the issue of slavery in the United States with the Court’s decision,
but it had the opposite effect.
The decision was fiercely debated across the country, as perhaps best exemplified by the Lincoln–Douglas debates of 1858.
Mortgage probe unveiled as foreclosure talks loom
By Jennifer Liberto @CNNMoney January 27, 2012: 3:34 PM ET
U.S. Attorney General Eric Holder and Housing and Urban Development Secretary Shaun Donovan explain a new mortgage meltdown working group to target wrong doing in the securities markets.
WASHINGTON (CNNMoney.com) — President Obama’s latest probe into the mortgage meltdown will have more power than past efforts, and federal officials say it won’t derail a possible $20 billion settlement for underwater and foreclosed homeowners.
U.S. Attorney General Eric Holder and Department of Housing and Urban Development Secretary Shaun Donovan took great pains Friday to explain how their working group into the mortgage meltdown will be better than past joint-agency federal probes.
However, one former watchdog says he thinks the new working group is “window dressing.”
“This certainly looks like political rebranding of the existing efforts,” said Neil Barofsky, a former special inspector general of the federal bailout of big banks.
…
“This looks like political rebranding of the existing efforts,”
I’m Canadian. I’m impressed with Mark Hanson:
http://mhanson.com/blog
He analyses efforts to avoid foreclosures. He argues that families re-default after being accepted in mortgage modification programs.
I am going to give you my plan: The plan starts with a foreclosure - the bank takes possession of the house. The bank then gets the insurance money from the government according to existing plans - Fannie Mae, Freddy Mac, whatever. The family gets $1000 a month for a year provided they leave the house in good faith - no water damage, reasonably clean.
No charge.
January 27, 2012 10:39 PM
Holder Announces Working Unit on Mortgage-Backed Bonds Fraud
(Updates with New York attorney general comments in 18th-19th paragraphs.)
Jan. 27 (Bloomberg) — A new U.S. government unit will investigate misconduct in the bundling of mortgage loans into securities that fueled the housing bubble and contributed to the financial crisis, Attorney General Eric Holder said.
In providing details about the new group, Holder said that the Justice Department in the past few days has subpoenaed 11 financial institutions in related investigations.
The mortgage fraud unit will “streamline” and “strengthen” current efforts to investigate fraud in residential mortgage-backed securities, he said today at a news conference in Washington.
The unit is intended to help “restore faith in our financial markets and institutions,” Holder said. “We will marshal our civil and criminal capabilities” in pursuing the investigations, he said.
President Barack Obama announced the new effort during his State of the Union speech on Jan. 24.
A coalition of labor unions, consumer advocates and political activists, including MoveOn.org, has been pressuring the administration to do more to probe banks’ home lending and the creation and sale of mortgage-backed securities.
…
“restore faith”
Is it just for PR?
Where are the words “prosecute” and “arrest”? Could there possibly be one state AG without a stack of “shovel ready” files on their desk after six years of looking into it?
No, they probably don’t. The reason this whole thing has been talked about as settlement issue right from the start is because the burden of actually prosecuting is so far beyond the ability of state AGs to prosecute that they never considered it. You would have heard about it if any of the state AGs had started to pull in a few hundred mortgage refinancers to try to establish whether their real income matched the income on their mortgage docs.
And you do know that the AGs would need the original documents to even start such a process, right? The ones that can’t be produced in order to do foreclosures properly? The original documents are needed.
And as I pointed out this morning in one of yesterday’s posts, what happens to a community if you could prosecute? Are there communities where 10% of the households signed mortgage documents with inaccurate income numbers? How do you decide who to prosecute? Everyone? Assign random numbers and pick the ones with the highest or the lowest numbers? How would it affect a community if 10% of the adults had to wait in line to take their turn doing 3 months in jail? Do you let married couples with kids take turns or put the kids in foster care? Who has to spend Christmas in jail?
And then, of course there is the little issue that it isn’t fraud by the applicant if the bank didn’t RELY on the information to make the loan.
Do you arrest the Johns or the Maffia Boss?
It would satisfy just to single out some CEOs. Yes, they really do know what company policy is.
Knowing it is true, and proving it beyonf a reasonible doubt, are two very different things.
I’m sure they had some notion of what was going on, but that everyone made sure that any explicit discussion was not put in writing at least not in the obvious places like the monthly meeting between the CEO and the head of the origination department. But you have to prove it “beyond a reasonable doubt” in a court. And you still have to prove that fraud happened. Which means you have to prove that someone relied on the bad loan number.
Answer me this:
Who committed a crime?
What crime?
What are the elements of that crime (pick any state that you happen to care about)?
How do you prove that the person you are prosecuting did all the elements of that crime?
How long and how much of the AGs resources will go to trying to do this?
Do the cops have the accounting skills to do the investigating for you and if not, who does it for you instead?
How many murderers and rapists and armed robbers are you going to have to plead down to nothing in order to take the time to do this? (Remember, AGs are politicians)
To not prosecute these criminals under the rule of law unleashes a moral hazard this country has not experienced, imo.
I realize it will be difficult, so was the Apollo program. To me, and hopefully others, it’s that important.
Polly, I strongly disagree. Trillions to keep the banks afloat, and more trillions to tear up the middle east, but nothing for investigation? Would we have to let all the rapists go to police a few mortgage brokers? I don’t think so.
Trillions to keep the banks afloat was from the Fed. No budget line item. No political process.
Prosecutions for fraud under state law has to come from the budget of the state AGs office. Line item in the budget of a state that is probably close to broke and is functioning under a state Constitutional requirement to have a balanced budget.
The one has nothing to do with the other.
“…and proving it beyonf a reasonible doubt…”
Why not give it the old college try, anyway?
“Who committed a crime?”
Who set up the robo-signing fraud scheme?
“What crime?”
Document forgery
Matt Taibbi
Taibblog
A Victory for the Public on Foreclosures?
POSTED: January 28, 12:07 PM ET
So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.
According to reports (like this one in the Huffington Post), the deal will not include:
- Criminal liability.
- Tax liability
- Fair lending, fair housing, or any other civil rights claim.
- Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
- CFPB claims for the period after they came into existence in July 2011
- SEC claims
- National Credit Union Association Claims
- FDIC claims
- Federal Reserve Board claims
- MERS claims
If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It’s far less than the real liability, but it’s a much bigger sum than I ever thought would be negotiated just for robosigning.
I’m interested to see what the market reaction will be if this deal goes through. On the one hand the banks will all obtain some certaintly and relief from robosigning claims. But on the other hand, all the banks are still on the hook in other areas, nost notably putbacks of bad loans.
Score one for Schneiderman/Harris. Coupled with the news that the subpoenas have already started dropping on the securitization front, I’m almost optimistic.
…
“Prosecutions for fraud under state law has to come from the budget of the state AGs office.”
What stops them from organizing a class action lawsuit, with the suit funded from the proceeds of potential legal damages?
So…..The Feds can’t do nothing because Fraud isn’t one of their beefs. States can’t do nothing because they are strapped with Constitutional balancing rules (except when spending Federal dollars to repave good roads). So how about we send in a few village cops, who are ready to cuff and rough? We’re a tad short on rapists here anyway.
“Who committed a crime?”
Who set up the robo-signing fraud scheme?
“What crime?”
Document forgery
That is a good question. I thought that the robo-signing was done by some two bit law firm in Florida (the one with the bad pictures from a Halloween party), because the few names were the same no matter which bank was involved. OK, there is one person - the one in charge of their foreclosure department. Florida has a case. Would you be happy with that? You don’t care about all the bad paperwork on the underlying loans? Because that is what I thought everyone else around here yelling to prosecute them all was looking for. They want the people who overpaid for houses with loans made with bad paperwork (that no one actually relied on) to get it.
The big state negotiations are working on that one. They have decided that getting some money is worth more of their time than a show. The banks are willing to take the financial hit as long as they have complete immunity from everything else they did through the whole bubble. A few state AGs are trying to limit the immunity they get for the pay off to just the past robo-signing acts so they can preserve the right to go for other stuff if they have the chance.
What I had in mind wasn’t robo-signing. More like lending based on BS income, knowing it, encouraging it, and then passing on the paper as solid gold, inflating the housing market along the way. Maybe it’s too convoluted, but seems to me a giant scheme, with many thousands of corporate players, and an astronomical theft.
Wasn’t the bad taste Halloween party in Buffalo?
As far as the crime goes, William K. Black, in his discussion with Moyers, said that while there might not be a specific law against liars loans, there are laws against fraud, and a liar’s loan would most definitely constitute fraud.
The banks sold mortgages with no chance of being paid back. Then when pooled into securities, the credit ratings agencies sold them as AAA securities. Seeing the credit rating agency’s USDA Prime stamp, the world bought lots of them.
Seems like there was plenty of fraud involved, from the credit ratings agencies non-examination/collusion with the MBS sellers, to the generation of liar loans themselves.
“Seems like there was plenty of fraud involved, from the credit ratings agencies non-examination/collusion with the MBS sellers, to the generation of liar loans themselves.”
Sounds like the way to go would be to nail the guys at the highest level of the hierarchy who would have been in on the fraud. I am highly skeptical that evidence would be that hard to find if a little prosecutorial zeal were applied.
OK. Here is what happened:
Originators got people to sign on the line for loans. A great many of those loans involved inflated income figures. But the bank or other institutions that originated the loans didn’t care about the income figure, really. They didn’t rely on it to give out the loan because they were going to sell it within 60 or 90 days, so it can’t really be fraud at that point of granting the loan.
Originator sells loan to the investment bank. Investment bank has some level of requirements for the loan pool, but the one thing they don’t require is the income on the loans be confirmed because they want lots and lots of these loans to put into the package and if they require paperwork, they won’t get as many or at least the originator will require they be paid more for doing the checking. No fraud here because they are perfectly aware that the loans are stated income and that there is no way to know what the incomes really are. Perhaps they have some study from a decade ago that says that on average the income from stated income loans is overstated by 15%, but that doesn’t mean that these loans will be the same.
Investment bank puts together the package and sends it to the rating agency. Rating agency gives its opinions based on the performance of similar packages of loans over the past 5 years. Well, all those loans were fine because as housing kept going up, no one ever defaulted when they couldn’t pay; they refinanced or sold. Their rating is based only on the facts of the package provided by the investment banks and the historical performance of similar packages. They do zero checking on the real income of the borrowers. They don’t get paid to do that.
Investment bank then puts together the bond package and sells the bonds. Except for a very few packages where they put together the loans to be the worst dogs in the bunch so they and their clients could bet against them (these incidents are being investigated), they truthfully describe the loan package including saying what percent of them were stated income loans and that in the past, studies have shown that income in stated loans is about 15% below the stated amount. They include the rating from the rating agency and the disclaimer that the rating agency didn’t review the loans and neither did they, but the originators of the loans did to the extent required (not at all) for stated income loans.
Where in that line of blissfully “ignorant” people do you place the blame. The only people who “knew” about the wrong numbers explicitly are the person who signed it (assuming it was changed or filled in after the signature) and the lowest level employee helping/filling in the wrong number with that person. Maybe the first level supervisor knew too. No kingpins. Except for the designed to fail packages, they protected themselves from knowing anything.
‘Where in that line of blissfully “ignorant” people do you place the blame.’
I blame whoever decided to bail them out, rather than letting them wallow in their folly.
“they protected themselves from knowing anything”
Business strategies do not start on the floor and work their way up to the board room.
So Bernie Madoff’s funds would have gotten a AAA rating based on five year performance criteria (his ponzi lasted about 20 years). Ditto with other ponzi schemes which last longer than five years.
So, it the sole criteria they were using was 5 year performance of “similar” loans, then are they guilty of reckless negligence, wild incompetence, or misrepresentation of what AAA meant?
Stated income versus verified income. Stated assets versus verified assets. Stated job versus verified job. NINJA / Liar loans had all these attributes as unverified.
And the rating agency model gave these the exact same weight as loans with all of these criteria verified?
Somehow they always managed to “err” in the way which made them more money.
From wikipedia: “http://en.wikipedia.org/wiki/Bond_credit_rating#Credit_rating_tiers”>AAA: An obligor has EXTREMELY STRONG capacity to meet its financial commitments.
They have no way of knowing this on NINJA/Liars loans. And yet they gave it a AAA rating.
IMHO, that’s one item of fraud, if that’s what AAA means.
‘And the rating agency model gave’
I’d like to point out that I was posting direct quotes from the raters in early 2005 that the reason they were giving AAA to a lot of this junk was because the govt would back anything Fannie and Freddie did. Their words.
All kinds of things were ringing alarm bells. First payment defaults, for instance. Sure, it showed up in subprime first, but that’s what you would expect. Now prime foreclosures far exceed subprime. And Moody’s and Fitch stood by what they had rated, not because the loans were good, but because the rating was based on Uncle Sam making good on the loan.
So I ask, didn’t congress notice the raters were saying these things?
I think the investment banks had the best, most firewalled business model. They didn’t need to know the quality of the loans they’re getting. They just package and sell them. If the inspector - the ratings agency - puts it AAA stamp on them, that’s not their problem. It’s the buyer’s problem.
However - if they knew they were likely selling a defective product, it seems there are parallels to car companies selling defective designs. Pinto and Explorer come to mind. Or tobacco companies claiming not to realize cigarettes are addictive and cause cancer.
The beliefs that would have been required for no one to be committing fraud would be:
1) House prices would rise in perpetuity at meteoric levels. Any slowdown in the rate of growth of prices or speed of transactions would have added an unknown stressor to the loans.
2) A loan in which the debtor whose job, income and assets were verified was as likely to be repaid in which a debtor whose job, income and assets were not verified.
So, I can see a CEO blithely getting up on the stand saying, “Yes Congresscritter, I did believe these things. Our sophisticated mathematical models indicated such concepts were accurate.”
In reality though, everyone knows the executive teams knew it was BS. Goldman Sachs selling securities it knew were likely to implode but since they were “market makers” they had no obligation to divulge this to their clients, who were “sophisticated investors.”
Fabrice Tourre talking about emerging standing from the rubble of all the complex deals in the email to his girlfriend.
You’re not going to get a guilty individual to admit he was committing fraud. It’s the old “There are lots of innocent people in jail. Just ask them” truism. But surely, a judge or jury could be persuaded.
Remember: The tobacco companies pretended they thought that cigarettes didn’t cause cancer.
In the 80s, during the S&L crisis, people had to wait some period of time before being able to access their money in the S&L’s. Yeah, they got their cash eventually. But their cashflow was interrupted. It caused a lot of sweaty palms and hardship.
So the ratings agencies didn’t know whether the initial debtor could repay. They assumed that the US government would pay out these loans. A good gamble in retrospect.
But - is that what AAA means? Unknown possibility of default and a likelihood of an insurer with no explicit contractual obligation paying it off? Seems a little bit more high wire than the AAA-hungry pension funds and the like would want.
I guess it again comes down to the definition of what AAA is.
But as always, they inevitably err in the manner which makes them profit.
How many tobacco company presidents are in jail?
‘a little bit more high wire than the AAA-hungry pension funds and the like would want’
Their rules say a certain rating (or range of ratings). If it’s AAA then that’s all they can buy.
‘I guess it again comes down to the definition of what AAA is’
That’s where the raters come in. It’s their (independent) call, not the govt or anyone else. Every assurance was in place that nothing could go wrong, when in fact it was all wrong. I remember thinking back then, ‘this is so circular, who the hell is responsible for anything.’ Turns out, no one was.
‘Any slowdown in the rate of growth of prices or speed of transactions would have added an unknown stressor to the loans’
That’s what happened. The raters were watching the loan performance like hawks (and I was reading their PDFs). Sure enough, loans started going bad in waves as soon as prices stopped skyrocketing. Prices didn’t even have to fall.
“How do you decide who to prosecute?”
Bigger is better.
“Everyone?”
Kingpins.
Kingpins…
Fair Game
It Has a Fancy Name, but Will It Get Tough?
Doug Mills/The New York Times
In his State of the Union address last week, President Obama announced that he was convening a task force to look into practices of the mortgage industry.
By GRETCHEN MORGENSON
Published: January 28, 2012
PRESIDENT OBAMA told the nation last week that he was convening a task force to investigate the abusive practices in the mortgage industry that led to our economic woes. Both lending and the practice of bundling loans into securities will come under scrutiny, he said, adding: “This new unit will hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many Americans.”
Some greeted this new task force — its unwieldy name is the Residential Mortgage-Backed Securities Working Group — with skepticism. It is an election year, after all, and many might wonder if this is just a public-relations response to the outrage against the institutions and executives that almost wrecked the economy.
If this task force nailed some big names, and soon, it would help to allay deep suspicions that the authorities have given powerful people and institutions a pass during this awful episode.
…
January 28, 2012 5:01 AM
Obama Administration Expands Aid for Delinquent U.S. Homeowners
Jan. 28 (Bloomberg) — The Obama administration, seeking to help more homeowners lower their interest rates and shed mortgage debt, will relax the rules on a federal loan- modification program and triple its incentives to banks.
The revised Home Affordable Modification Program, or HAMP, also would pay Fannie Mae and Freddie Mac to forgive debt on homes that have lost value. The government-owned companies, citing cost, don’t reduce principal, a policy that has limited HAMP’s reach because they own or guarantee nearly half of U.S. home loans.
Housing and Urban Development Secretary Shaun Donovan, Assistant Treasury Secretary Tim Massad, and White House National Economic Council Director Gene Sperling announced the program changes yesterday in a phone call with reporters.
“This will expand the reach of HAMP,” Massad said.
…
Fannie, Freddie writedowns too costly: regulator
WASHINGTON | Mon Jan 23, 2012 6:26pm EST
(Reuters) - The regulator for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) told lawmakers that forcing the two mortgage firms to write down loan principal would require more than $100 billion in fresh taxpayer funds.
In a letter sent on Friday to the Republican and Democratic leaders of a U.S. House of Representatives government oversight panel, the Federal Housing Finance Agency explained why it has long opposed principal reductions for borrowers who owe more than their homes are worth.
It said it had determined that such reductions would be more costly for the two firms than allowing those troubled borrowers to default.
The regulator has been under pressure from Democrats to permit the write-down of principal by the two government-controlled mortgage finance providers as a way to help some of the millions of U.S. homeowners who are “underwater.”
Representative Elijah Cummings of Maryland, the top Democrat on the Oversight and Government Reform Committee, has pushed the housing regulator to explain its thinking in deciding not to offer principal reductions.
FHFA, however, has maintained widespread principal forgiveness would undercut the finances of Fannie and Freddie, which have already received about $169 billion in taxpayer aid. Republicans have supported FHFA’s decision.
“FHFA has a statutory responsibility as conservator to preserve and conserve the assets and property of the regulated entities,” FHFA’s acting director, Edward DeMarco, wrote in the letter to lawmakers dated January 20.
…
The regulator for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) told lawmakers that forcing the two mortgage firms to write down loan principal would require more than $100 billion in fresh taxpayer funds.
Only $100 billion? Heck I don’t even read past the headline anymore unless $1 trillion or more is involved.
The Next U.S. Housing Market Bailout
Housing-Market / US Housing Jan 27, 2012 - 07:37 AM
By: Mike_Whitney
Best Financial Markets Analysis Article
Why are housing prices falling when the number of houses on the market continues to decline? Usually, when supply shrinks, then prices rise, right? So, why isn’t that happening now?
The reason is that housing market never completely cleared, which is to say that the Fed’s interventions and the manipulation of inventory by the banks prevented the market from finding a bottom. So, now– a full 6 years after the peak in home sales in 2006–the real estate depression continues while prices drift lower still. And–here’s the bad part–no one knows how much farther prices will drop, because the existing inventory of homes on the market (according to the Wall Street Journal) is presently 1.89 million while the shadow inventory (according to CoreLogic)… is “1.6 million units” which represents another 5 months supply, “the same level as reported in July 2011.”
So we’re back to Square 1.
Here’s more from Corelogic:
“Currently, the flow of new seriously delinquent loans into the shadow inventory has been offset by the roughly equal flow of distressed (short and real estate owned) sales.
CoreLogic estimates the current stock of properties in the shadow inventory, also known as pending supply, by calculating the number of distressed properties not currently listed on multiple listing services (MLSs) that are seriously delinquent (90 days or more), in foreclosure and real estate owned (REO) by lenders.” (Calculated Risk)
So, there’s a mountain of backlog to work-off before the market touches bottom and prices stabilize. But even that doesn’t accurately describe the troubles facing the market. The biggest obstacle to any real recovery is the millions of distressed homes that are set to come onto the market in the next few years. Those numbers will swell by many orders of magnitude when the banks and the 50 Attornies General agree to a settlement on the Robosigning fiasco some time in early 2012. When an agreement is finally reached, a flood of foreclosures will pour onto the market pushing down prices, wiping out precious homeowner equity, further eroding bank balance sheets, and forcing more underwater mortgage holders to “walk away”. Here’s how CNBC’s Diane Olick sums it up:
“The biggest headwind facing the recovery unquestionably is the distress leftover from the housing crash– foreclosures and properties with delinquent loans. ….Right now, there are approximately 6.2 million properties that have delinquent mortgages or are already in foreclosure….. Now not all of the delinquent loans will go to foreclosure especially if legal settlements involve principle write down and more loan modifications…”
…
COLE: Obama’s next bailout
Proposed settlement hides payoff to banks worth hundreds of billions
By Rebel A. Cole
The Washington Times
Friday, January 27, 2012
On Jan. 23, U.S. Department of Housing and Urban Development Secretary Shaun L.S. Donovan met in Chicago with several Democratic state attorneys general (AGs) in an attempt to strong-arm them into signing up for an administration-backed agreement to settle the “robo-signing” scandal. Wall Street would pay what sounds like a large fine ($25 billion), and in exchange, the state AGs would relieve the bankers of all legal liabilities related to the fraudulent mortgage-lending practices that led directly to the 2008 financial meltdown and a 30 percent drop in U.S. home prices.
Sadly, this is nothing more than another bank bailout, in addition to the $700 billion Troubled Asset Relief Program (TARP); the $7 trillion in loans to the banks from the Federal Reserve; and the Fed’s zero-interest-rate policy, which allows banks to borrow from the Fed at zero percent while investing in U.S. Treasury bonds at 4 percent.
The fraudulent practices of the mortgage servicers have injected an untold number of forged documents into the legal system, jeopardizing the clean titles to millions of homes around the country. The costs of cleaning up this legal mess will most likely be in the hundreds of billions of dollars, yet this settlement would let Wall Street settle up with the state AGs for just $25 billion. Worse yet, most of this money would come from the pockets of investors who now own the mortgages, not from the perpetrators of fraud, and the rest would come out of the pockets of bank shareholders rather than from the miscreants who perpetrated the fraud.
…
Of course it is…
State pension chief wants to double down on investment strategy
TALLAHASSEE — The official managing Florida’s $120 billion pension fund wants lawmakers to double the amount of money his agency can set aside for special investments that critics say are harder to value and carry more risk than traditional stocks and securities.
“It is not about struggling to get higher returns and taking on more risk in the effort,” Williams said.
But critics say just the opposite, painting the investments as secretive and potentially dangerous.
Read more here: http://www.miamiherald.com/2012/01/18/2596284/state-pension-chief-wants-to-double.html#storylink=cpy
Broke today, or even more broke tomorrow.
set aside for special investments that critics say are harder to value
Sure reminds me of Level 3 assets on bank balance sheets.
Hard to value implies hard to detect how bad things really are. In other words, hard to blame the guy running the pension fund.
Still planning to rob Peter to pay for Paul’s house?
State of the Union Preview: Housing and Fairness Don’t Connect
Published: Tuesday, 24 Jan 2012 | 12:15 PM ET
By: Diana Olick
CNBC Real Estate Reporter
If the theme of tonight’s State of the Union address is fairness, then President Obama would be wise to steer clear of housing; most of the proposals to fix the nation’s still struggling real estate market are intrinsically unfair to a large majority of Americans.
From a mass refinance plan to mass mortgage principal forgiveness, the supposed “fixes” will reward some at the expense of far more.
…
the supposed “fixes” will reward some at the expense of far more
That’s how all of our socio-economic systems work now. Nothing new or surprising there. When the government comes in and wants to “help”, few people or organizations will benefit, and most people will be hit with the bill for it. Period.
This farce will continue until most people become so poor that they start to vote against big government. By then, of course, their votes won’t matter anyway. A Ron Paul or Jesse Ventura will never run again. Corporations will totally own the political process. The only means of finding relief will be to drop out entirely, and the government’s enforcement arms will have a field day, cherry-picking their targets, since dropping out will be illegal.
After that? Shooting government officials and burning their buildings. Personally I can’t wait. A future of guerrilla war is still better than an Idiocracy future.
Can’t wait? Would you care to reveal your target list (highest priority at the top). And when can we expect to hear that you’ve started?
“A future of guerrilla war is still better than an Idiocracy future.”
It’s very obvious to me that you’ve never been in the armed services, let alone in a war zone.
No revolution is legal. Why would I reveal anything that detailed in public? I’m not looking to sit in jail cells for the time when they are machine gunned by the victors.
And I’m a vet. Stop posturing. Obviously I’d prefer to have no war, but EVERYONE is choosing war, in one way or another, so there’s no way I can choose peace. This is my nation and I’ll have to fight my fellow man for it. That’s the bottom line.
Sleep tight. One day, your quiet nights of sleeping well will be over.
Why are the World Stock markets going up? What got changed in the past 2-3 weeks?
They think that Europe has figured out a way to let Greece default on 70% to 80% of its debt without triggering the credit default swaps?
But, what about Italy, Portugal, Spain.
Heck, even Ireland that is seeing great pain from austarity may back out of its current deals and demand massive write-down of debt.
Presumably they expect that whatever deal is worked out for Greece will be able to be reproduced for the others. That once the hedge funds/banks/etc. agree to take a voluntary haircut for Greece, they will do the same for the others. This of course, is false. Once you get screwed over big time on one investment, there is an irrational expectation that the other ones will turn out better just because they are different than the first, but if the circumstances are similar, there is no reason why others can’t turn out to be just as bad as the first. Of course, Greece was in particularly bad shape and has/had structural issues that the others don’t/didn’t, but the others could still end up in the same place. There are many paths to failure.
Florida real estate development ain’t all that any more…
MARKETS
JANUARY 28, 2012
St. Joe Pares Back Its Florida Vision
By ROBBIE WHELAN
St. Joe Co., one of largest landowners in Florida, signaled that it is scaling back development plans again, an indication that its efforts to turn the state’s Northern Gulf Coast into a cluster of luxury second-home communities have been a flop.
On Friday, the company indicated in a Securities and Exchange Commission filing that it has adopted a “new real-estate investment strategy” that will see it reduce capital expenditures at its master planned communities. The firm said it also expects to sell undeveloped parcels in bulk at discounted prices.
The company expects to report a charge of between $325 million and $375 million for the fourth quarter of 2011, when earnings are released next month. That would amount to about one-fifth of the company’s market capitalization and about half of the total real-estate assets on the company’s balance sheet, which totaled $759.6 million at the end of September.
Friday’s news was the latest in litany of convulsive changes at St. Joe, which has struggled since the housing bust and has had just one profitable quarter since 2008. Last spring, the company’s largest shareholder, Miami-based mutual-fund manager Bruce Berkowitz, successfully ousted St. Joe’s board in a proxy battle and installed himself as chairman. In March, he named Park Brady, the former chief executive of vacation-rental company ResortQuest, with a mandate to cut costs and return St. Joe to profitability.
In July, the WaterSound, Fla., company disclosed that the SEC was investigating the company’s accounting practices for possible fraud and looking into whether Mr. Berkowitz filed the proper regulatory forms in acquiring a large portion of St. Joe’s stock starting in 2008. That investigation remains unresolved. Mr. Berkowitz declined to comment through a representative.
…
Arrested Development
Slump pinches second-home communities
1936 Year when St. Joe Co. started
577,000 Acres owned by the company, mostly in Florida
$190 million Capital spending to be put on hold
I believe this article references a deal which includes 4S Ranch (aka Foreclosure Ranch), which is a mile down the road from us.
CalPERS discloses $250 million realty loss
By Dale Kasler
dkasler at sacbee dot com
Published: Thursday, Jan. 19, 2012 - 12:00 am | Page 6B
CalPERS took a $250 million loss on a massive land deal as it continues to reposition its battered real estate portfolio, the pension fund said Wednesday.
The sale of a coast-to-coast string of housing developments is the latest move by CalPERS to overhaul its real estate holdings in the aftermath of the housing market crash.
The pension fund agreed to sell its share of 28 different housing developments to the U.S. arm of Japanese home builder Sekisui House Ltd.
CalPERS’ partner in the investment, Newland Real Estate Group of San Diego, is keeping its share and has formed a partnership with Sekisui. The pension fund has been doing business with Newland since 1995 and still has some investments with the San Diego firm, said CalPERS spokesman Wayne Davis.
The sale includes 16,000 unbuilt home sites and 5,800 acres of land available for commercial use. Four of the developments are in San Diego and Riverside counties; the rest are spread across the country.
Brad Pacheco, another CalPERS spokesman, said the pension fund lost $250 million on the sale.
Despite the loss, the California Public Employees’ Retirement System made the deal because it’s trying to restructure its real estate holdings, Davis said.
CalPERS bet heavily on the housing market and lost about $9 billion in the crash. It lost $900 million on one deal alone, a Los Angeles-area housing development called Newhall Ranch.
…
I know an individual who was very high up in the CalPERS system. This individual sure crowed about their returns when the RE market was hot.
I tried to tell them.
CalPERS was still investing in RE deals in 2007, IIRC.
CalPERS bet heavily on the housing market and lost about $9 billion in the crash. It lost $900 million on one deal alone, a Los Angeles-area housing development called Newhall Ranch.
I wonder what the Realtor’s commission was on that deal?
a Los Angeles-area housing development called Newhall Ranch.”
that’s closer to me It was really big I wonder what happened to it?
Driving around the ‘Moorpark highlands’ reminds me of 4S ranch, big homes on small lots and big windows on the sides of the homes facing each other, maybe 15 feet apart.
AP Interview: Roubini warns of tough times ahead
By EDITH M. LEDERER, Associated Press – 1 day ago
DAVOS, Switzerland (AP) — Economist Nouriel Roubini, nicknamed “Dr. Doom” for his gloomy predictions in the run-up to the financial meltdown four years ago, says the fallout from that crisis could last the rest of this decade.
Roubini, widely acknowledged to have predicted the crash of 2008, sees tough times ahead for the global economy and is warning that without major policy changes things can still get much worse.
Until Europe radically reforms itself and the U.S. gets serious about its own debt mountain, he said, the world economy will continue to stumble along to the detriment of large chunks of the world’s population who will continue to see their living standards under pressure, even if they have a job.
Roubini, a professor of economics and international business at New York University, spoke in an interview this week with The Associated Press at a dinner on the sidelines of the World Economic Forum, where he is one of the hotly pursued stars.
Looking at economic prospects this year, he agreed with the International Monetary Fund’s latest forecast that the global economy is weakening and said he might be “even slightly more bearish” on its prediction of 3.3 percent growth in 2012.
He painted a grim picture of the eurozone in recession and key emerging markets in China, India, Brazil and South Africa slowing down, partly related to weakness in the eurozone. He predicted that the U.S. economy, the world’s largest, will grow by just 1.7-1.8 percent this year, with unemployment remaining high. The government, he added, was “kicking the can down the road” and not taking measures to increase productivity and competitiveness.
“We live in a world where there is still a huge amount of economic and financial fragility,” he said. “There is a huge amount of uncertainty — macro, financial, fiscal, sovereign, banking, regulatory, taxation — and there is also geopolitical and political and policy uncertainty.”
“There are lots of sources of uncertainty from the eurozone, from the Middle East, from the fact that the U.S. is not tackling its own fiscal problem, from the fact that Chinese growth is unbalanced and unsustainable, relying too much on exports and fixed investments and high savings, and not enough on consumption. So it’s a very delicate global economy,” Roubini said.
He said the biggest uncertainty is the possibility of a conflict with Iran over its nuclear program that involves Israel, the United States, or both. That could lead oil prices now hovering around $100 a barrel to spike to $150 per barrel, he said, and lead to a global recession.
Unemployment and economic insecurity have become big issues from the Mideast to the Occupy Wall Street movement in the U.S., and protests from Israel and India to Chile and Russia — and at the same time there is rising inequality between rich and poor.
“All these things lead to political and social instability,” he said. “So we have to reduce inequality. We have to give growth to jobs, skills, education, and increase human capital so workers can compete.”
Roubini called for a major change in policy priorities.
“We have to shift our investment from things that are less productive like the financial sector and housing and real estate to things that are more productive like our people, our human capital, our structure, our technology, our innovation,” he said.
Roubini said slow growth in advanced economies will likely lead to “a U-shaped recovery rather than a typical V,” and it may last for another three to five years because of high debt.
…
“We have to shift our investment from things that are less productive like the financial sector and housing and real estate to things that are more productive like our people, our human capital, our structure, our technology, our innovation,” he said.
Is this pretty much the position of the Federal Reserve Board?
No more FIRE economy? What will all the Realtors do? The Financial advisors? The Bankruptcy attorneys? Insurance con-men? Healthcare scammers
That’s more than half of the workforce of Amerika.
So, $2 an hour wages to compete with Mexico?
Mexican minimum wage is currently 64 cents an hour. That said, only the most menial of jobs are paid minimum wage. Median monthly wage in Mexico is about 3100 pesos, which is about 258 dollars a month, an hourly rate of $1.68 an hour.
Here are some other average salaries in Mexico:
Database administrator: $1200 USD per month
MD, General Practitioner: $1300 USD per month
MD Cardiologist: $1500 USD per month
Notice that MD’s earn what is basically US minimum wage. As I’ve said before, in Mexico only the managerial class earns what we would recognize as a US middle class wage.
Source, misalario.org
Is the cost of living cheaper down in Mexico? Can an MD there afford a nice place to live and the other material goods that make up a decent standard of living? Or do they live in poverty, like American minimum wage workers?
Is the cost of living cheaper down in Mexico?
No, it’s not. Beans and tortillas are cheaper. But stuff like houses, cars, electronics cost the same. Most food costs about the same.
Yes, they live in conditions that we would consider “poverty”.
For instance, it can get cold in Mexico City in the winter (it is 7000 ft above sea level). The middle class does not have heating in their homes. We did, because we were upper middle class, but I remember well visiting friends at their homes, which felt like refrigerators.
As for where an MD lives, it’s probably a small two bedroom apartment in a high rise building where the elevators are broken half the time. Imagine having to climb 10 flights of stairs to get to your apartment. His car is probably a subcompact beater. One thing to keep in mind is that in Mexico MDs are not considered gods as they are in the USA.
There are nice homes and nice cars in Mexico City, but they are owned by the managerial and business owning class. Individual contributors, even with degrees from good universities can expect to make at most $1500 a month. I have cousins down there in that situation and they tell me that my standard of living in the USA is that of a “millonario”.
Very interesting, In Colorado—thanks for sharing that.
Some more anecdotes.
My private high school also did not have heating. I remember wearing my jacket during class in the winter.
Most people get their healthcare from “El Seguro” or the IMSS (Instituto Mexicano de Seguro Social) as it’s officially known. In Mexico the IMSS provides old age pensions much like SS does in the US, plus it runs the national health system. Most MDs work for the IMSS, hence their low wages. Elite MDs, often foreign trained, can earn more by catering to the well off, who would never set foot in an IMSS hospital.
Most blue collar workers in Mexico are unionized. When they strike they have the legal right to shut down their place of employment, it’s illegal to hire scabs.
Most state universities are free or nearly free (say $20 USD a semester). There is a glut of graduates. Even grads from prestigious private schools have a hard time finding a good job. My brother graduated from ITESM (Mexico’s top school). He tells me that most of his classmates have emigrated to the US.
At the end of the day it’s really hard to compare the US and Mexican middle classes, in part because the term has different meanings in both countries. Being middle class in Mexico means you don’t live in a shack made out of cardboard with a fiberglass roof. It means you live in a tiny unheated apartment, probably without a land line or a mobile phone. No cable, you might have a car, something at least five years old.
The government has a program called INFONAVIT which builds low cost housing (those high rises with busted elevators) for the middle class, which is sold at sort of low prices with all kinds of resale restrictions. The waiting list is decades long. For this reason many college grads don’t leave the nest until even in their 40’s. In many cases they wait to inherit the apartment.
I have two cousins in their 40’s who fit this bill. Their apartment is in the old Olympic Village, which is much nicer than INFONAVIT apartments. Their dad was rich and when he divorced their mother he bought her the apartment.They will probably inherit it from her when she dies. Their sister was able to work her way into the managerial class. She’s a manager in a US multinational’s accounting department, with about 50 subordinates. She makes about $4K USD a month, as does her husband, so they live with a US middle class standard of living.
Of course, living at home with the folks can free up some money to buy a newer compact car, buy some nice clothes and even take the girlfriend to Cancun once in a while. When I was a teen I had a few cousins who did just that, biding their time until they could become managers.
Interesting…..
I spent a month in Mexico City on a project for a bank(unnamed) back in the 1990’s. The bank hired a thug with a sidearm and fast car to get me around Mexico City. One of the more strange experiences in my life.
“Is this pretty much the position of the Federal Reserve Board?”
Shearing the flock is their one and only position.
Maybe that’s the new slogan for Occupy:
Who is gonna buy YOUR home if we don’t have good jobs and have huge student loan debts to pay off? Maybe at 50% of today’s prices.
———–
Roubini called for a major change in policy priorities.
Comment by Blue Skye
2012-01-28 13:14:29
“In a far away place, before you were born,”
You’ve done this “before you were born” thing a couple time. Do you think that me being “only” 45 somehow discredits my opinions?
This is knows as the ad hominem logical fallacy, accacking the person rather than the argument. This sort of personal attack is usually indicative that the person can not attack the argument.
“I married a beautiful woman who had “needs”. Her needs were met with charge accounts. Her needs far exceeded the imaginations of this young scout. Her needs were insatiable. She was a spoiled brat.”
So, are you implying that everyone that lives on credit is a spoiled brat?
“Our journeys took us to the land called Credit Limit. She fell into a great depression, in which we discovered that her needs were not so great. She learned to do with less and the charge accounts faded away with time. And she and I were very very happy.”
The money she was spending, where did the money come from? Answer: It was borrowed into existance when she used the charge card.
Where was the money going? Answer: To people that were accumulating money.
Would money accumulation by some have been possible without this new money creation? No. Before money can be accumulated in the hands of one person, first it has to be borrowed into existence by someone else.
So, now I ask a simple question for you to answer.
What would happen to the economy, if everyone stopped going into debt, including the federal government?
What you are describing is the starting case for “The Paradox of Thrift”. What is good for the individual is bad for the economy as a whole.
It is based on the cold, hard reality that one person’s spending is another person’s income, and one person’s money is another person’s debt.
No spending, no income.
No debt, no money.
If you are proposing that we all do as you (plural) did, without first attacking the trade imbalances that are draining money out of circulation, creating the need for the unsustainable debt growth in the first place, then the obvious end result is cascade debt default into depression.
Is that what you are hoping for?
The trouble with racing thoughts is that you miss a lot.
Before money can be accumulated in the hands of one person, first it has to be borrowed into existence by someone else.
If this is true, then I’d like to thank everyone who is living above their means, for making it possible for me to save.
Shhh! Only the rich are supposed to know that!
Darrell,
The fact that you keep repeating (and repeating, and repeating,) the same thing does not make it true. You’re getting lost in here, son. Time to start working your way out of it….
Davos play-by-play commentary:
Geithner’s Future And Recession In Britain – OpEd
Written by: VOR
January 29, 2012
By Roman Mamonov
One of the main issues on the agenda of the World Economic Forum in Davos this week was the situation in Russia ahead of the presidential elections in March. Investor attention also focused on the US and Britain after Timothy Geithner expressed doubts about his future as US Treasury Secretary, while Britain posted a 0.2% decline in its economic activity over the last three months of 2011 and a record high state debt of over 1 trillion pounds, or more than 64% of the GDP. The Voice of Russia’s Roman Mamonov reports.
Apparently, Chancellor Angela Merkel became the main newsmaker at the forum. She urged Europe to delegate some of the responsibilities to Brussels in order to rescue the economy and regain trust. Overall, Mrs.Merkel set a pessimistic tone for the discussion by saying that Europe had failed to learn lessons from the 2008 economic crisis. Yevgeny Yasin of Moscow’s Higher School of Economics comments.
“The agenda of the World Economic Forum is set by its executive chairman Klaus Schwab. This year, the opening address was made by Angela Merkel which demonstrated that the forum would have to search for a radical solution to the eurozone debt crisis. Until recently, all the decisions adopted in relation to eurozone aimed at reinstating the pre-crisis status quo. It looks like the eurozone countries have reached the limit of their potential.”
…
In the United States, an increase in consumer spending and commodity stock has triggered a hike in the GDP which went up 2.8% in the fourth quarter of 2011 compared to 1.8% in the previous quarter.
The main political intrigue of the week broke out in the US, where US Treasury Secretary Timothy Geithner announced that he might have to quit this year. In his interview by the Bloomberg Agency, Geithner said that President Obama would not keep him in his current job if elected for a second term in November 2012. Nord Capital’s analyst Vladimir Rozhankovsky had this to say.
“Geithner is the last fully fledged economist left in the Obama administration. All prominent politicians who used to shape US financial policies under Obama have already left their posts. Geithner’s departure would draw a logical line under that trend. Investors, however, are unlikely to plunge into despair over all this as in the past year Geithner’s mission has been fairly limited anyway.”
…
” Comment by jeff saturday
2012-01-28 17:03:40
“I’ll defer to the Dilbert Principle here. Everyone is stupid at least one a day.”
So that`s it! Everyone is stupid at least one a day except for conservatives and they are stupid and racist everyday.”
You clearly didn’t read the article about the study.
It is averages with lots of overlap.
Men are taller than women. That does not mean that the shortest man is taller than the tallest women.
Or, we could go with what I infered that you were trying to imply… that book smart people are actually dumb.
How about we compromise? Experience and knowledge are frequently more important than raw intelligence. I hold this to be self-evident, but I have no idea what that would have to do with correlation between IQ and politics or racism.
“what I infered that you were trying to imply”
Rather like shadow boxing.
One in 15 people have an IQ of 124. Shadows are always larger than life.
“You clearly didn’t read the article about the study.”
Actually I did, but that`s not what you posted. This is…
“So, are you racist because you are dumb? Or are you just a conservative because you are a dumb, and that makes you racist?”
Which to me is like throwing a blanket over a group of people like….
Definition of RACISM
1: a belief that race is the primary determinant of human traits and capacities and that racial differences produce an inherent superiority of a particular race
Only instead of race you are superior because you are liberal.
My last reply to someone yesterday was…
“I know some bad @ss smart guys too. But I can`t prove that either. I know some bad @ss liberals that are smart too. But I can`t prove that either. These guys in this story didn`t fall in that category”
“I wouldn`t want an opened minded guy like you to think I would throw a blanket statement out about a whole group of people”
But one thing you said made me feel better.
“Intelligence is your ability to see patterns in the data, when you are actively looking for them. Intellignce is not a measure of eductaion, experience or how often you take time to think things through before doing them.”
Because I think I see a pattern.
Liberals that do studies that are probably funded by tax payers that come to the conclusion that conservatives are dumb and racist.
All conservatives are not dumb and racist, with the exception of redneck conservatives- who are dumb and racist.
I find that statement dumb and racist.
“All conservatives are not dumb and racist, with the exception of redneck conservatives- who are dumb and racist.”
OK after having done my best on this subject and pointing out some smart guys can do a dumb things and don`t handle pain well. On the subject of rednecks who are racist although I can`t prove this either and I would never say all or the majority of any group is smart, dumb, racicst or whatever. You come down here and I`ll take you out to Loxahatchee and introduce you to a couple of guys that would make you think I was left of Barrack Obama. I`ll introduce you, but I ain`t staying long.
don`t should have been didn`t
Well the client cut all the contractors including yours truly. At least they gave us three weeks warning. I am in Phoenix for the weekend and headed for my last roundtrip to Florida. Might go back to the South Bay where the weather is awesome all year!
I will mail some stuff to Phoenix and come back with a full suitcase, a duffel bag, and my iPad. Travelling light makes sense in this economy.
Good luck finding your next gig!
Thankyou Blue Sky!
I will be back on the web in about six hours.
Hang tough, Bila. Please keep us posted as to your thoughts about your travels and job offers.
Thankyou Ahanson! It is extremely likely I will change my screenname back to Bill In Los Angeles! I love El-A!
I wish you skill and good luck finding your next contract, Bill! Any progress in playing with the Android SDK?
Probably will have plenty of time to get back to it. Thank you Michael!
The Social Security trust fund is an accounting gimmick, and always has been.
To demonstrate, consider this thought experiment. Let’s say we were to add $100 trillion to the trust fund.
The Treasury prints up $100T in bonds and carries them to the SSA, which adds them to the binder that holds the current $2.5T in treasuries.
At 2%, we add $2T to government interest payments. The SSA loans this interest back to the government. “Net Interest” on the debt doesn’t budge.
SS Trust Fund problems solved! Nice work, Darrell! Sounds like we can generate as much interest as we need at no cost and no risk!
Cain meet Abel, or is Abel meet Cain?
Choosing lives, is it:
Easy peasy, lemon squesy
or
Difficult, difficult, lemon difficult
Who’s to say?
(Let’s let the Gov’t’s & Religous leaders decide for us! pas/oui)
(Eyes thought the argument was life begins @ 1st cell “Division?)
Doctors in Peru to remove ‘parasitic twin’
Associated PressAssociated Press
IMA, Peru (AP) — Doctors in Peru have found a “parasitic twin” in the stomach of a 3-year-old boy, and plan to surgically remove the tissue Monday.
He says the partially formed fetus weighs a pound and a half (700 grams) and is nine inches (25 centimeters) long.
Astocondor says the brain, heart, lungs and intestines never developed after the fetus was absorbed by the other fetus inside the mother’s womb. He says it has some hair on the cranium, eyes and some bones.
Reality is far too complex to fit wihtin the simple explainations demanded by the masses.
Reality is far too complex to fit wihtin the simple explainations demanded by the masses.
And this is why the realtors, mortgage brokers and fannie mae can see nothing wrong with a strawberry picker in a $700k California home.
Happens a lot more often then people think.
TLC had an entire show called “I am my own twin”.
Here is another reason I believe the abortion issue is too complex for a flat out ban. If that parasitic twin had a brain, there would be some who would argue that its life should be preserved, even if it cost the boy and the twin their lives and even if the twin could not survive on its own.
Opponents hear abortion and their image of it is some promiscuous woman choosing not to deliver a potentially healthy child. But there are a variety of situations that are better left to families and their doctors to decide.
Will the housing market come back after the Souper Bowl?
CMO Network
1/26/2012 @ 5:47PM
Why Century 21 Is Advertising In The Super Bowl For The First Time
Century 21, a real estate company that a few years ago had shifted marketing spend to digital media in lieu of TV, is back to TV in a big way, as that move includes its first-ever Super Bowl spot. The company actually announced its plans to participate in the big game last March. The :30 ad in the third quarter of the game as well as pre-game spots feature Deion Sanders (jersey number 21, coincidentally), Donald Trump and Apolo Anton Ohno and are a continuation of its new “Smarter, Bolder, Faster” campaign from agency Red Tettemer & Partners.
It actually has been 21 years–again, coincidentally–since any real estate company has advertised in the Super Bowl, said Bev Thorne, Century 21 CMO. I talked with her about the Super Bowl ad, why it made sense for the brand, and what sort of payback she expects to get from the reportedly $3.5 million price tag.
What was the rationale for deciding very early on to advertise in this year’s Super Bowl?
At that point in time we viewed the timing of the Super Bowl as perfect for a couple of reasons: It was our 40th anniversary mid-year 2011, and we felt this was a perfect tail-end celebration. It is also the jump-start to the spring selling season.
…
I don’t even think that flat panel TV sales will rise significantly prior to the Souper-douper bowl
What is the Republican plan for housing? I’m guessing it might be a push for deregulation, in order to return to the Wild, Wild West of the subprime lending era, when loans were easy and foreclosures were few. Then the next time a housing-led economic collapse takes place, the Republicans can step aside and let a Democratic president take over for the bust years. After four years, they can blame the housing situation on the Democratic president and set up a Republican candidate for the White House.
But perhaps I am being unfair to the Republicans here. Could any of our RNC representatives kindly step up to show how wrong I am?
Hint to RNC big thinkers: Higher home prices ain’t the ticket.
Republican Candidates Offer Few Solutions to Housing
by Mike Wheatley - 28 January 2012
Up until recently, the housing crisis has been mysteriously absent from the GOP candidate’s agenda – when they discuss economics, they talk about creating jobs and reducing debts, while largely ignoring the fact that millions of American homeowners are fighting to avoid foreclosure.
But as the Republicans battle for votes in Florida’s crucial January 31 primary, the housing issue has suddenly become much harder to simply brush under the carpet. Along with California and Nevada, Florida has been an epicenter for foreclosures over the last five years, with residents in some areas seeing more than 50% wiped off the value of their homes. Clearly then, housing is a crucial issue in a crucial vote that could go a long way to securing the presidential nomination for whoever wins.
So with the Republican candidate’s stance on housing firmly under the microscope at last, is it too much to ask the respective candidates to come up with any concrete solutions? Unfortunately, it appears it may well be…
Mitt Romney has been the most vocal of candidates in the housing arena in recent days, staging rallies at Florida foreclosure hot spots, laying the blame on fellow candidate Newt Gingrich and President Barack Obama while asserting he can fix the problems.
But despite all of his bluster, Romney, like the rest of the GOP’s remaining candidates, has offered few concrete ideas.
Romney, along with Gingrich, has argued that the repeal of new federal banking regulations, together with the reform or dismantling of Fannie Mae and Freddie Mac will free up lending and help to boost home prices.
…
Their solution is more of the same. Promote enslavement to banks. The party duopoly wants to enslave you to the Federal Reserve.
Romney has actually said several times during the debates to let to market clear. He does not expand though and explain that means even lower prices. Chicken! Ron Paul also says the same thing get the bad debt out of the system. He does not explain either that this means lower prices. So the Republican plan is to let the bubble deflate.
I’m starting to warm up to any of the Republicans. I think anyone of them would make a big push to really pare government spending. Drastically reducing the size of government would help the economy and increase the quality of life.
Not sure what it is with governemnt solutions guess it’s because they’re often the result of committee work? Instead of a common sense obvious simple solution to any problem it seems government hires “experts” for millions for a costly dumb solution.
Take the post office. They want to close a lot of rural offices to save money. Well a lot rural people alreay drive to the post office to get their mail. Why does the post office not elminate front door service and make people who have mail boxes on their houses move them to the sidewide? Have you ever watched the mail carriers in San Fran going up one and two flights of stairs to get to one house?
Here in suburban Boston last year we had tons of snow. Again if the mail carriers could just walk down the side walk instead of going to each house.
Then you would not have ask some flyer country person to drive not 10 miles to the post office instead of 5 miles. Guess those people collectivel don’t have enough votes.
“I think anyone of them would make a big push to really pare government spending.”
Would that possibly involve less foreign military adventurism? Because I hear Obama talking about cutting back military, and Republicans talking about ramping it up (RP excepted).
And one of the candidates is talking about turning a moon station into the 51st state by the end of his second term. How does that fit into your perception that ‘anyone of them would make a big push to really pare government spending’?
“I’m starting to warm up to any of the Republicans. I think anyone of them would make a big push to really pare government spending. Drastically reducing the size of government would help the economy and increase the quality of life.”
LMAO. uh huh. Right.
Your focus group talking points won’t work here.
The current position of the republican party on housing I think is take all the property in default and sell it for a huge discount to the private sector who will absorb it and ether flip it or rent it. -OR- Withdraw all government support of the mortgage market, dissolve Fannie/Freddie/HUD/FHA and take the write off against the Social Security fund.
“…take the write off against the Social Security fund.”
Why not take the writeoff against the greater fools who invested in housing, and leave Americas pension fund out of it?
Because the greater fools are the richthat laoned money to people that can’t pay it back. The SS trust fund is just an accounting gimmick.
BTW, thank you all for the extra 3.6% in the monthly check starting this month. Income transfer programs are wonderful if you’re one of the recipients.
Like a bad penny, I’m back!
Best. Trip. Ever.
Wandering around the obscure parts of Gujarat and Rajasthan. (This is not my first trip to India. More like double digits. And I speak the language fluently which provides endless entertainment value.)
Bit jetlagged here but I’ll try and upload the pics by the next weekend. Tons of them and need to classify.
Ben and PB, I did have amazing spicy meals and vegetarian ones - the two states above are India’s most agressive vegetarian ones.
For ahansen, I didn’t leave much of a mess but I did have one instance of swearing like a drunken pirate which was both necessary and appropriate. I even got a buncha thank-you’s for it.
Welcome back Faster. We kept the place just as you left it!
After watching Ice road truckers and the dealiest roads in INDIA…no wonder why you swear..
http://www.youtube.com/watch?v=x_JLtET19vs
“…one instance of swearing like a drunken pirate which was both necessary and appropriate. I even got a buncha thank-you’s for it.”
Upon leaving a party:
Welcome back, FPSS!
swearing like a drunken pirate which was both necessary and appropriate
What language did this occur in??
Can’t wait to read the newsclippings and State Dept. security analyses. Pix coming soon? ( Pleeeeze?) (Especially of memorable meals?)
Glad you’re back, Puss.
Well, bought the car yesterday. Big news for me since I only buy one for myself every 12 years or so. Hopefully this one lasts at least that well.
I went down to the dealership because they had one kind of like what I was looking for and since it was just down the street it was a good time to show the family and see if they thought it would work. Turns out it had been misadvertised and was exactly what I’d been looking for and hadn’t found in a 1+ year nationwide search. Price was decent and I ran out of reasons not to…
Congrats!
Now go break the rear window to further help your fellow citizens & America-the-Nation-ready-to-implode!
Speaking of.
My son went to a school danc last night, and while his car was parked in the school parking lot, the window was broken out. Nothing stolen, just the window broken out.
Suck. Even more money I can’t afford to spend.
darrell…thats what full glass coverage is for…I never drove without it. especially on a station wagon.
It’s super expensive here in the Centennial State. They sand the roads out here when it snows, and there are bits of gravel in the mix, which get kicked up and hit your windshield. Almost everyone has a nick or even a bulls eye in their windshield, and cracked windshields are very common. I’ve replaced about 4 of them in the past 15 years. It’s just cheaper to shop around than to get the windshield coverage.
When we bought our MINI the dealer tried to sell us lifetime windshield replacement coverage. IIRC, it would have cost something like $800.
I got my last truck windshield in Montana for $115.
Sorry. I guess broken window economics doesn’t work too well when you have no money available to fix the window.
“and while his car was parked in the school parking lot, the window was broken out.”
That sucks, sorry to hear that.
Whatever you bought, I hope you enjoy it.
Thanks. It’s an 08 335xi with a manual tranny and all the packages.
The word “tranny” has a different meaning in the real world.
Probably my most memorable New York memory involves a tranny and a Hasidic Jew in the subway at 4am but there are a few things (like memories) that no amount of money can buy.
It depends on which real world you live in. I’ve never heard the word tranny used to describe an transvestite out here in flyover.
Over here the word is synonymous with a vehicle’s transmission.
“Over here the word is synonymous with a vehicle’s transmission.”
How does that work if the driver is a transvestite?
And that’s the real question, of course.
How does that work if the driver is a transvestite?
That could get confusing!
“That could get confusing!”
Tranny tranny = the transmission in a transvestite’s car…
New moniker for the financial collapse: “Too Big to Fill”
AL’S EMPORIUM
JANUARY 29, 2012
A Hole Too Big to Fill
By AL LEWIS
The sluggish recovery isn’t proof that government stimulus spending doesn’t work.
It’s only proof that we just haven’t spent enough yet.
The required amount is denominated in trillions. But Larry Summers, the Harvard University president who would become President Obama’s economic adviser, didn’t want to spend trillions.
In a secret memo he wrote to Mr. Obama in December 2008, Mr. Summers argued that a stimulus plan sporting such a big number might just freak people out. “An excessive recovery package could spook markets or the public and be counterproductive,” he wrote.
It sounds quaint, but in 2008, the idea of a trillion-dollar stimulus package was nearly unfathomable.
…
Through assorted programs, the Fed has injected the trillions into the economy that Congress and the president could not. Since 2008, the Fed has put more than $3 trillion into the economy between its zero-interest loans and purchases of Treasurys and securities from banks.
Yet Mr. Bernanke, now fearful of a debt crisis in Europe, is still not expecting a full recovery for years. “Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.
Oh, how far we have not come since the financial crisis of 2008. Maybe all we need is a big-enough boost.
Or maybe the hole we blew in our economy is too big to fill.
How much air do you have to pump into a time for that air to fill the hole in the tire?
How much blood fo you have to pump into a gun shot victim before that hole in his Aorta repairs itself.
We pump $1.3+T a year into the econmoy, and it instantly leaks out via trade imbalances, international and domestic.
” Comment by Anon In DC
2012-01-29 09:29:57
I’m starting to warm up to any of the Republicans. I think anyone of them would make a big push to really pare government spending. Drastically reducing the size of government would help the economy and increase the quality of life.”
Please explain this to me.
If we are talking things like gtting rid of EPA regulations, okay. China shows that not having any environmental controls is great for business.
But what other cuts to government would help the economy.
You mention letter carreirs not going upto doors. Okay. Boxes on the street. Or even better, one big box for the whole street like newer housing developments. Now we lay off tens of thousands of postal workers.
How does tens of thousands of newly unemployed postal workers help the economy or inprove the standard of living.
I’m not saying it is a bad idea in general. I just do not understand how it improves the economy.
You mention letter carreirs not going upto doors. Okay. Boxes on the street. Or even better, one big box for the whole street like newer housing developments. Now we lay off tens of thousands of postal workers.
I don’t see how laying postal workers will balance the budget. The USPS is bleeding, but they are covering it by not making payments to the pension plan, IIRC.
If anything, a GOP admin will probably start an expensive war with Iran, so DoD spending will grow.
“…a GOP admin will probably start an expensive war with Iran, so DoD spending will grow.”
That plus a ramping up of NASA to turn the moon into the 51st state by the end of Newt’s second term.
Talking about spending cuts and budget balancing is nothing but empty rhetoric to get elected.
Or, more likely, the crazy moonbase idea is empty promises to get elected.
Question of interest for those with good memories or knowledge of history: Was JFK’s proposal to send a man to the moon viewed with as much skepticism as Newt’s moon base proposal is currently?
Is Newt’s Moon Colony Fantasy or Science Fiction?
By E.D. Kain
Jan 27 2012, 3:47 PM ET 118
Newt Gingrich has long prided himself as an ‘idea’ candidate, someone whose grand visions differentiate him from the rest of the pack. Perhaps the grandest of those visions has emerged in Florida’s ‘Space Coast’ this week, during the countdown to the Florida primary.
“By the end of my second term, we will have the first permanent base on the moon and it will be American,” Gingrich told Floridians. When 13,000 Americans are “living on the moon, they can petition to become a state,” he added.
Florida’s economy has been hit hard by cuts to the space program, with thousands of jobs lost and tens of thousands more impacted in tourism and other industries. Is Gingrich simply trying to appeal to voters who feel threatened by cuts to the space budget and NASA or is his vision a real possibility?
…
May ‘61 when the peldge was made, the space program was in full effect. Mercury was alredy fully planned out. NASA was ready for a “what next”.
I’m not sure how realistic it was considered, but there wasn’t a giant “WHY”?
Today, the ability is not in question. The limitation is, why even bother?
‘why even bother?’
Because the moon is an existential threat to Israel?
Noot has yet to explain how he can achieve anything like that, when the federal government is commonly borrowing 40 cents on each dollar spent each year.
Even if he does put the lunar base on the same borrow-budget, what then? It will cost $100 billion to setup, and $10 billion a year to keep supplied. What will it be for? Oh, you know it: It will be for keeping the aerospace contractors happy. (And well fed.)
Noot is buying votes. That’s bad enough, but in this case he’s just outright LYING to do it. The Shrub promised us Mars. It didn’t happen. Now Noot is promising us the moon. Hey wait, isn’t that an old saying? Chilling.
“Noot has yet to explain how he can achieve anything like that,…”
Campaigning means never having to explain how your pie-in-the-sky plans would work in practice.
Newt Gingrich has long prided himself as an ‘idea’ candidate…
The Economist: In a profession which specialises in hypocrisy, Mr Gingrich’s performance stands out. He harried Bill Clinton for having sex with an intern 27 years his junior when he was having sex with a staffer 23 years younger than himself. And as a man currently on his third wife, his private life, inasmuch as that matters, is hardly consistent either. His arrogance, meanwhile, verges on monomania. He once wrote of himself as the “definer of the forces of civilisation”.
Question for the HBB brain trust:
Any hot tips for somebody who has a sizable amount of money parked in a checking account paying ZIRP?
Investing goals:
1. Capital preservation.
2. Better returns than an FDIC-insured account.
2. Better returns than an FDIC-insured account.
Note that some are better than others. My credit union has an account that is currently paying 0.55%, which is more than I can earn on short-term Treasuries with little interest-rate risk. I have some T-Bills as well, but they earn less and would have higher costs if I did want to liquidate them to do something else with the cash.
I guess I’m just trying to say that it is worth shopping around; not all FDIC rates are created equal.
I’m leaning towards parking enough to cover a small short-term emergency reserve in an account such as you described, then put the remainder in a Vanguard Balanced Retirement Fund for people planning to retire in 2015. I’m not ready to retire, but these funds are designed to use asset diversification to find a balance between higher returns than on a passbook account with low volatility suitable for someone soon to retire.
I’m now a believer in dollar cost averaging, after thinking about Bill_In_[location]’s take on it.
Personal experience though makes me wonder about the wisdom of large moves into the stock market (after moving 10K into an S&P 500 index fund, then 10 years later, I cashed out 11K, while most of the time the amount was less than 10K).
Bankrate dot com is saying average 5 year CD’s are paying 1.6%. Average 1 years are .75%.
Principal preservation is the name of the game. “I’m more concerned with the return OF my money than the return ON my money.” — variously attributed to Mark Twain or Will Rogers. Sounds naive on the upside of the bubble but makes more sense now.
I’m now a believer in dollar cost averaging, after thinking about Bill_In_[location]’s take on it.
I must have missed this—what was his take that swayed you?
It wasn’t this Bill. Being some years into retirement, it’s ALL about capital preservation for us. But the last of the treasury ladder bonds and the 5% credit union CD (which we have been able add to at any time) both expire in 2012.
I’m thinking a diversified portfolio of short and intermediate term state/local bonds and some utility bonds (Verizon ain’t likely to go bust anytime soon), holding everything to maturity. But a blended yield of 3% or so is probably all I can expect to get.
Bond mutual funds are a ticking time bomb IMO.
Well, understanding the model. The model can be viewed as one stock with an average price. When the market goes down, the buyer purchases more of that stock, lowering the average price of the stock. When it goes up, the buyer purchases less of it, again suppressing the average increase price of the stock.
So, it seems to me that one gets an exaggerated net increase in the price of the stock over time. Over time being the operative words.
Now, this assumes a rising market. I’ve gone to finance.yahoo.com and seen the long term averages. It can be flat for many years. I’m a little colored by my view of the 1987 to 2008 period which was a debt-fueled time of “prosperity” and a persistent stock boom. But… I’m hoping that the US is not going to be as gentle as Japan and will eventually force some losses on the bad investments. And that it will unbollox (uncronify) its financial system. That will allow it to grow once more and attract people and capital from around the world. It is certainly an “IF” though. It’s a guess. But, we’re merely at the beginning of history not at the end of it.
Regarding large moves into the stock market, that feels like playing poker blind to me. Or betting on the horses blind. I tried it with a nice round number some years ago, and got a return that was less than what I could have gotten in a savings account and much less than CDs. I got in after almost 23 months after the NASDAQ peaked. The S&P was significantly lower than its highs. It was post 9/11. It still had quite a way to go. I thought I was patient and prudent, but it was a gamble which I made without any real information other than prior performance. The market dropped to its low in June 2002.
I’m certainly not an evangelist for the stock market having had a 10 year radically underperforming run. But if one is going to get into the stock market, dribbling in a set amount on a regular basis (dollar cost averaging) seems the way to go.
Hmm. I seem to recall it was a variant of Bill*. The defense worker Bill. I might be wroo… wrrrrruh… wro… mistaken. I have the same problem with the Wr word that Fonzie had
There are a few banks that pay airline miles in lou of interest. If you travel, it may be worth your while.
Open house today what a dump…..I pass by this house when i’m walking home…according to records they put down $125K paid $575K…guess they want their deposit back…..rent $1550 and $1225 taxes $3800 whats the real price….oh as is…at least there is a fenced in back yard you cant access from the top apt without walking out the front door and around the house… check out the video…Oh 1 boiler…1 thermostat…upstairs..and its illegal to split utility bills in NYC, you as a landlord should figure in the rent.
http://newyork.craigslist.org/que/reb/2823999348.html
Hi everyone, not new to loitering on this blog, but new to actually writing something. I think I might have got onto this blog just in a nick of time several years ago now. Because of what I learned here, and at the time, this was the only place I could find anyone who even remotely thought that the real estate situation wasn’t right, I sold some condos and paid off some other SFR’s. Again, many thanks to this blog and its members. But now I have a growing family and need a bigger house. I finally started looking around this weekend. There were many people looking at the open houses I went to. One of them was actually out of fliers. I hate to admit it, but I do turn to this blog for real and, so far, astonishingly accurate info. I guess the bottom line question is, exactly what inning is the North San Fernando Valley (which is North of Los Angeles) in these days. Have I been sitting on the sidelines too long? Are there actual reasonable prices to be had ? Hope all is well all you all.
If you can:
1) Afford the payments.
2) Thought about what’s going on with the location - what kinds of developments are planned and what impacts that will have on the value of the house and the quality of life.
3) Calculated in what you think depreciation will be over the next 2, 5, 10 years.
4) What kinds of losses if you have to sell at 2, 5, 10 years.
5) And compared all that to renting a place.
If it pencils out, well then it’s your own private buyer’s market.
That’s my $0.02. Standard disclaimers apply.
There’s a lot of homes listed under $250k, but I’d bet that they’re pretty rough. A nice middle-class family neighborhood is still going to cost you $400k+ for a 3/2 with a backyard, which is way beyond my ability. Now if I rode the housing wave upward for the last twenty-five years, flipping homes along the way, and I could pay cash then sure. Realize that home prices will fall for years to come, but your loss would be relative as all homes will lose value proportionately.
Ruff, my moms long term tenant moved out last year and my brother was going to move in but then he realized the school district would be inferior to what my nephew has now..he has great friends on the honor roll twice last year good summer school programs,…so he could have sold his house and saved easily $5-600 a month renting and he’s been out of work a lot (electrician). Maybe it would be cheaper to add a room, block in the garage, open the attic or redo the basement?
But now I have a growing family and need a bigger house. I finally started looking around this weekend