Bits Bucket for February 6, 2012
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The Housing Bubble
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It has become apparent to me that people are unwilling to accept that gold is no longer money. I’m tired of that padantic point tripping up my discusions of modern economics.
Henceforth, I shall call the money that is borrowed into existence, that consistitues the foundation of modern economics, “Legal Tender”.
Legal tender is what you can pay your debts with, pay your taxes with, is the legally recognized and regulated currency of a nation.
So, can we agree that legal tender is borrowed into existence? Can we agree that legal tender is always equally offest by debt?
Becasue the people with debt need to get legal tender to repay thier debts, and people need legal tender to pay thier taxes, legal tender has value. This allows people to trade in legal tender, knowing that others will be willing to trade them stuff for their legal tender.
Legal tender transactions constitute the vast, vast mojority off all finaicial transactions. People looking to buy something with a barter currency, such as bever pelts and wampum or cigarettes or piggyback rides, usually have to first convert those barter currencies into legal tender, then use the legal tender to purchase what they want.
Can we agree that the only way one group of people can be increasing their holdings of legal tender is if another group is spending down their supply or borrowing that legal tender into existence?
Does that satisfy the gold bugs that are still living in the 1800s when it was common practice to directly barter gold for goods and services?
So, legal tender is borrowed into existence, it is always equally offset by debt. Those that have debt can’t possibly pay it back, unless those with legal tender first spend the legal tender they hold.
It is the unsustainable growth in debt over the last 30 years ($4T to $37T) that allowed the creation of the legal tener ($4T to $37T) necessary to fund our international trade imbalances and widening domestic wealth disparity.
Drastic variations in the labor wage of various countries has made trade imbalances inevitable in a free trade environment. Those trade imbalances can only exist as long as the trading partners are accumulating legal tender while we’re going into debt to create the new legal tender.
If we simply stop borrowing the excess legal tender into existence, while the trade imbalances exist, the legal tender in circulation will drain out of circulation via international and domestic trade imbaalnces. This would result in massive economic slowdown, debt destruction, and legal tender poofage. Since virtually all assets are priced in legal tender, not barter currencies, we should expect massive deflation of asset prices, and the global econmy plunging into greater depression.
It is my opinion that the only way to stop relying on unsustainable debt growth is to first attack and reverse the trade imbalances that created drains on legal tender. Only after we have reversed these flows of legal tender, can we stop the unsustainable creation of new legal tender.
We need to end free trade by placing a tariff on legal tender as it leaves the country. We need to revert to a 1950s style tax code with a very high top marginal rate, above 90%, with lots of deductions, to encourage those with large amounts of legal tender to spend it rather than continuing to accumulate more.
Does that remove the objectionable use of the term money to describe the stuff that is borrowed into existence?
If money is just printed paper, why can’t our government just print up an unlimited amount and give it out to everybody to spend?
That was easy. What other problems need to be solved?
Because
1) Money is not wealth. Printing more money would make the prices of goods go up, unless that new money was equally offset by increased production of wealth to buy with that money. Governments and central banks work hard to ensure price stability by ensuring that new money is not printed too fast to cause inflation to be above targets.
2) The government also has to borrow it, or it has no value. If there is not debt offsetting the money, then the money would have no value. So, with unlimited printing, there would be unlimited interest payments, meaning very high taxes to pay the interest. What the government givith, the government takith away.
3) Just giving people money is the worst thing possible. Giving money without it having to be offset by wealth creation(work/resources), means people stop bothering to create wealth (the fatal flaw of communism).
These are pretty much the same reasons that the economic policies of free trade and flatter tax code are doomed. Free trade, in the face of highly unequal global wages creates trade imbalances, creating a need for ever more legal tender to be borrowed into existence, until we reach the point that wages are insufficient to even make a reasonable principal payment on the debt even at near 0% interest..
Flat tax leads to the pooling of too much legal tender in too few hands, creating a need for unsustainable new legal tender creation to pay the interest on the legal tender previously pooled into too few hands.
To remove the need for unsustainable legal tender creation/debt creation, we need to attack and reverse the trade imbalances that created the need for the new legal tender creation in the first place.
Is it fair to say that “legal tender == money”? Euros are not legal tender in the USA but they are most definitely “money”. Gold isn’t legal tender but it is almost as liquid as fiats, and is easily converted into fiats (unlike houses).
That is exactly one of the reasons I have struggled to understand your points, Darrell.
When I read your post above, Euros also jumped to mind for me. They are not legal tender (because I live in the US), but they certainly can be readily exchanged for it at some floating rate of exchange; in my mind, gold is relatively identical.
So Euros would be “wealth” for me living in the US, but “money” for someone living in Europe?
So Euros would be “wealth” for me living in the US, but “money” for someone living in Europe?
I think they’re just a different group of people’s IOUs that can easily be exchanged for “our” IOUs.
I don’t see why this is to hard for people to comprehend, but there’s that word “legal” in legal tender. Legal implies jurisdiction, hence nations and their sovereignty. And like another poster implied, it’s not an issue anyway since any national currency is exchangeable for any other, using a bank as a broker. The only possible problem with a fiat currency is in situations where there is no government; either that never happens, or when it does, you are in a freshly-bombed-out war zone and have much, much bigger problems than trying to buy a few eggs.
A Euro is legal tender somewhere. It was borrowed into existence somewhere, so has value only as long as there are individuals trying to get it to repay the debt. The value goes to zip as soon as everyone holding debt in Euros decides to not pay back.
It is not wealth, regardless of where the person that holds it lives. It is legal tender (money) that can be exchanged for other legal tender because there are people that have debt in each legal tender. The eagerness of people with those debts to exchange legal tenders is what drives exchange rates.
The Euro is collapsing.. oh, swap all my Euros for Dollars, Price of the dollar, in euros, goes up while the price of the euro in dollars goes down.
We keep sending dollars overseas at a rate $650B more than bring them back in, and pretty soon, no one will want dollars as they already have too many, then we’ll see what happens to the price of imports/exports.
Gold has value, not because people need to get it to repay debts. But rather, because of tradition. Pre-modern metallurgy, it was one of the few pretty metals that people could “work” at room temperature. If you wanted to show off to others how “rich” you were, you could pay people to beat gold into pretty shapes to wear to decorate your house with.
As long as stores run ad’s saying a woman won’t give you a little some-some unless you buy her gold, gold is going to have value. As long as thugs wear gold to show how much richer and more powerful they are than others, gold will have value. As long as people think of gold as a safer store of wealth that “worthless IOUs” that we call legal tender, gold will have value.
But, there is now where on earth that gold is commonly used as the standard for establishing value, and regularly traded directly for other goods and services. Gold is not counted in the money supply. I would argue, (as does Ben Bernanke) that gold is no longer “money”. It is wealth.
Ron Paul asked, why do central banks hoard gold vs. diamonds. I would argue that gold is fungible, dividable and a more liquid market. It is a better version of wealth for central banks to store to convince people that if the going got rough, they have tangible wealth they could use to trade for their legal tender to adjust exchange rates of needed. Being able to use it to manipulate exchange rates of your legal tender, does not make it money. Is that really a credible threat? Probably not.
5 billion ounces, all the gold available to man, even at $2000 an ounce, would only be $10T. There is more than $37T in existence, and that is just a small portion of the global supply of legal tender.
But, as the Bernanke says, it’s tradition.
I would argue, (as does Ben Bernanke) that gold is no longer “money”. It is wealth.
Except that Euros and gold both seem relatively identical in their properties if I hold them.
Both are readily exchanged for dollars at some floating rate of exchange. Neither are accepted for day-to-day transactions in the US.
But one is money and one is wealth? They seem the same for all practical purposes.
I get that one is created via debt and one is not, btw.
But one is money and one is wealth? They seem the same for all practical purposes.
You can’t actually buy a cheeseburger with gold. Someone at the restaurant, perhaps even the employee you’re dealing with, might happily pay for your meal using money, and then keep the gold themselves, but surely you see the difference. You couldn’t deposit the gold with your money at the bank, and expect it to be valued at its weight. And you couldn’t pay your taxes with it. Those are some of the differences between wealth and money.
Someone at the restaurant, perhaps even the employee you’re dealing with, might happily pay for your meal using money, and then keep the gold themselves, but surely you see the difference.
The same exact reality applies equally to the Euro, when one is here in the US as well.
You couldn’t deposit the gold with your money at the bank, and expect it to be valued at its weight. And you couldn’t pay your taxes with it.
All of those same things could be said of the Euro here in the US as well—and yet you consider it to be money?
“Except that Euros and gold both seem relatively identical in their properties if I hold them.”
Except that Euros only have value for as long as people with debt denominated in Euros are trying to get them to repay their debt. Gold has value for reasons other than there being someone that needs it to repay their debt.
Gold has value for reasons other than there being someone that needs it to repay their debt.
So what you are saying is that if gold were legal tender in even a single country somewhere on this globe, then they would be identical from my point of view?
All of those same things could be said of the Euro here in the US as well—and yet you consider it to be money?
No, I don’t consider the Euro to be money in America, for the reasons just stated (taxes, bank deposits, etc). It may function as something near to money in some places, but certainly not everywhere. I guarantee you can’t buy a cheeseburger with a Euro in most restaurants in the US. That’s why it’s not money, or legal tender, if you prefer, which is ‘legal for all debts, public and private’.
And Euros were borrowed into existence, too, and therefore have an offsetting debt just like dollars, only in a different monetary system.
“So what you are saying is that if gold were legal tender in even a single country somewhere on this globe, then they would be identical from my point of view?”
No its not identical. It isn’t borrowed into existence. Its value doesn’t come from people needing debt to repay debt. Its value doesn’t go away as soon as people with debt stop trying to repay their debts.
So, what is a better word/phrase to describe the dollars, Euros, pounds, Yen, Yuan, etc etc etc, that is borrowed into existence, has value only because people need to get it to repay their debts, goes away when the debt is repaid….
Most people call it money, but the people that think this is still the 1800s and that barter currency is still commonly used in daily transactions reject that use of the word money.
I reject the term ‘fiat money’ since the government doesn’t directly set the value of items by fiat, the market does based on perceived value, supply/demand, etc.
I figured that “legal tender” was a good phrase since it is comes from debt and can be used to repay debt, but, as you point out, JUST because there is no country on the planet that defines gold as its legal tender, doesn’t mean one couldn’t.
So, you tell me. What should I call the stuff that is created from a loan, has value because people need it to repay loans, and goes away when the loan is repaid? You know… the stuff that everyone on the planet except the gold bugs calls MONEY?
The other advantage of gold was that it was about the densest metal known. So any attempt to alloy it with base metals lowered it’s density, something that was fairly easy to detect.
So, you tell me. What should I call the stuff that is created from a loan
I kind of like the term “debt-based money” myself.
But your “legal tender” seems fine to me as well. Just recognize that any country anywhere in the world could elevate everyone’s gold to “legal tender” status by decree.
The “asset” or “wealth” or even “money” terms seem kind of arbitrary to me. Everything that I have or could buy can be exchanged for anything else, at some suitable rate of exchange, based on relative valuation, possibly a penalty for liquidity, etc. It’s all fungible, until you have to pay off a debt in some agreed-upon debt-based money.
No, I don’t consider the Euro to be money in America, for the reasons just stated (taxes, bank deposits, etc).
Ah, then it seems that we are violent agreement, alpha. Sorry, I thought you were disagreeing with me.
Darrel,
At this point all you are saying is currency (legal tender) exists. You’ve agreed that there is something else called wealth and that you can save it. You have agreed that you can exchange wealth for legal tender, and that wealth can be created without issuance of debt. You posit that legal tender can not be created without issuance of debt.
The origin of this entire debate is that it would be a disaster if everyone saved because no currency would be exchanged and no one could pay off their debt. We have concluded that saving can take place in asset (non-currency wealth) and therefore currency can still be exchanged while people continue to save. This is the case because you can produce an excess of commodity through labor; excess being more than is necessary for you to exchange for currency to trade with and live on.
I hope at this point you can conclude that everyone can therefore save independent of debt or currency. Of course, operating on the assumption that “everyone” is able to produce enough such that their basic living needs are able to be met. I quote “everyone” because obviously we are skipping the whole social safety net issue, and those who are unable to produce enough to sustain themselves.
I don’t think he’s saying that there’s a problem with people saving/hoarding wealth. The problem is with people saving/hoarding legal tender and reducing access to it by those who owe it.
Darryl, you are wrong. If Bernanke just would announce at one of his meetings that it would be ok for everybody to take a magic marker and add a few zeros to every bill in their wallet we could all afford to pay off all of our debt and have plenty left over for a few flat-screens. Hell, we could even start a new housing bubble. Just think of all the jobs that would create. Obama would be a hero. Everybody wins. America could be number one again!
Clearly I’m being baited, but I’ll bite the hook anyway.
Add a few zeros to every bill. I assume you mean the paper bills in circulation that make up the money supply. Well, there are something like $1T in those in circulation. The vast majority of those bills are $100s, and they are sitting in bank/casino vaults. There are some 7 billion $100 bills in circulation, but with a life expectancy 4 times that of the $20 bill and you can get an idea of how often they are issued. Have to have them on hand in case someone comes in and wants to cash out their $1 million savings account balance or exchange $1 million in casino chips, but that is pretty rare.
At any given time, most households and businesses have maybe a couple hundred, MAYBE some have a couple thousand on hand.
But, let’s say every household was handed $5K. Then, that $5K was turned into $500K. More than enough to pay back each household’s $350K share of the $37T in debt, including their share of govt debt with $150K left over.
No one shows up for work, because everyone is shopping. No one wants to trade you anything for your dollars, because they have plenty already. The dollar becomes worthless. We’re back to a barter economy where people are trading wealth for wealth because the underpinning of legal tender, the need to get it to repay debt, is gone.
All legal tender has been rendered worthless.
So, is the hook that eventually legal tender will become worthless and only barter currency will have value? The point may prove to be valid, but at this time, that has not yet happened.
For now, the vast majority of transactions still occur in legal tender, and even the transactions that are barter in nature, legal tender is the unit by which each party judges the value of the wealth they are trading away.
So in The New Economy we either work or we shop. I guess that sounds about accurate. There really isn’t much point to saving, and just sitting around is too boring. The whole object is really to consume more than we produce so time is pretty precious. I am going to convert some dollar bills into $hundred million bills just to be ready for when Bernanke makes the announcement. I would do a $Quadrillion one, but the zeros would end up running onto George Washington’s face, and that kind of disrespect of our founding fathers would just not be right.
Liz, what do you do with savings? Put it in your mattress? Worthless pieces of paper no one wants?
Put it in a bank to be loaned out to others? Sorry, but in your scenario, everyone that did that just got paid back with worthless paper that no longer has value because no one needs it but everyone has it.
Use it to buy capital like property, plant and equipment? Sorry, but no one is selling you any of that stuff for your worthless paper because no one needs it and everyone has it.
In short, without the debt creating a need for the legal tender, no one has need of it and it therefore, has no value.
It just dawned on me which bubble we are now in. This is the “bull$hit bubble”. A bubble where there is no room for reality, sensibility does not exist, and frugality and resourceful thinking is futile. I have been watching CNBC all day in the background and the whole vibe reminds me so much of the housing and internet bubbles nearing their respective peaks. The bullshit bubble works on money/debt relationship explanations using double-talk that are meant to completely bamboozle/baffle investors into a state of frenzied complacency. Don’t really know how long a bullshit bubble can last or how it will pop, but one thing is certain: This one will too pop and one day Reality will again begin to matter.
A bubble where there is no room for reality,
Maybe you need to re-evaluate your conception of reality.
Facebook, Chevy Volt, “Green Energy”, iCloud, Credit Swaps, Banksters, Obama, the FED, Republican Clown Car, Greek Bailout, Partisan Politics, HAMP, Debt Ceiling: All vital ingredients to our bull$hit bubble. But the single most important must have catalyst would be our current agenda-motivated, hype-driven media. Couldn’t have any bubble without the MSM, but they are absolutely instrumental in a bull$hit bubble.
We are collectively too stupid to exist much longer as a modern society. Whatever comes, we will deserve.
I think one of the places that your discussions are getting caught up is that people seem to be assuming that you are saying that when they go to a bank that *their* money was borrowed into existence by them when their perception is that their money is their savings. I know that you are not saying that every use of money (or legal tender) is a borrowing of that legal tender into existence, but that may be where part of the problem is.
Personally, I prefer to think of legal tender as a claim on someone’s future goods and services. I think it is a clearer way to think about is and it doesn’t tend to get into the emotional reactions you are getting from people on this board who are a bit more debt averse than most.
Also, you keep insisting that the important thing is for people in the US to spend their money. People in the US already spend a heck of a lot of their money. The wealthy don’t. And the young aren’t supposed to as they should be saving up for the time in life when they will spend their savings to live on, but that is a timing issue, not a spending one. There is one other place that has a lot of US dollars that could spend them into circulation so they would be available for people in the US to pay down their debts. That is China. If they bought more US goods and services, that would help things out quite a lot. It would also, by definition, reduce our trade deficit with China. That is why you get a lot of policy people talking about China letting their currency float against the dollar. Because that is what is needed for our goods to compete. That and a carbon tax which would act as a tariff on goods made in China powered by dirty coal.
The goal is a reasonable balance between goods and money. So that we don’t have high levels of inflation or deflation. 500 years ago, when the economy was relatively static, this was done by having the supply of money based on the likewise relatively static supply of precious metals. Of course there were problems. In an agrarian society, where food is a major expense, there was considerable year to year variation of the amount of food (and therefore goods) that people wanted to buy with a relatively fixed supply of specie. And it was a world without small change. The smallest coin in common circulation* in England was something like a days pay for a common labourer.
But in today’s economy we create more goods every year than decay in that year. So a fixed supply of money leads to ever lowering prices. Which is a bad thing, because it tends to concentrate wealth even more than our current economy does.
*The silver penny. There were half and quarter pence, but the seignorage on them was higher, so people didn’t want them. Which is to say that two half pence or four farthings weighed less than one penny, so people were reluctant to accept them.
The problem with deflation is that it encourages people to hoard rather than spend. We’re seeing it in housing today. Why buy now when you can expect the house to be 5-10% less in a year and maybe 20-30% less in 3-5 years.
If everyone is waiting to spend for goods and services, then no one can be employed making goods and services today.
In the larger economy, if gold was the only money, and gold supply is increasing at 1% per year while goods and services produced is increasing at 5% per year, then the only intelligent decision is to not spend gold… and with no one spending gold, the economy ceases to exist.
So, we created debt based legal tender as a more dynamic money supply. The problem was that with barter money and legal tender money supply co-existing, there was a series of booms when people trusted debt based legal tender, then times of panic when too many all tried to convert to barter currency at the same time.
The 1800s was an incredibly tumultuous economic time of booms and busts trying to accommodate barter currency and debt legal tender co-existing in a dynamic economy. 17 recessions and depressions including the long depression lasting more than a decade.
Inflation is a stick to get people to spend today instead of delaying. Unfortunately, if interest is higher than inflation, then the stick to spend goes away. Why spend it, when I can loan it to someone else, let them spend it, then live on the interest forever. Answer: Unsustainable debt growth eventually leads to default and the legal tender you saved and re-loaned goes poof, depression.
The problem with deflation is that it encourages people to hoard rather than spend.
It’s not just deflation. Now that the little people are being indoctrinated that there will be no SS waiting for them when they get old, they understand that they need to save whatever they can (not that they will).
“I think one of the places that your discussions are getting caught up is that people seem to be assuming that you are saying that when they go to a bank that *their* money was borrowed into existence by them when their perception is that their money is their savings.”
Hmmm… I’ve gone quite out of my way to label their legal tender as other peoples’ debt, indicating that OTHER people borrowed that legal tender into existence. The legal tender has value, because those other people now need to get it back so that those other people can pay back their debt, destroying both the legal tender and the debt.
Personally, I think the break-down comes from peoples’ distaste for the idea that legal tender is nothing more than debt.
I’m attacking the foundation of their economic desires. People tend to believe what they want to be true, and I’m telling them things that they really do not want to be true.
At its root, I think they want to be able to eat their cake and have it too. We need to pay down our debt. Oh, but we have to be able to do that without the people that currently have the legal tender being forced to have less.
If someone comes along and points out that it is impossible for people to accumulate legal tender without others first borrowing it into existence, and then it is impossible for people with debt to repay that debt without the legal tender being… ummmm… what’s a good word? being de-accumulated from the hands of those that currently hold it,
Sorry peeps, but you can’t eat your cake and have it to.
“Personally, I prefer to think of legal tender as a claim on someone’s future goods and services. I think it is a clearer way to think about is and it doesn’t tend to get into the emotional reactions you are getting from people on this board who are a bit more debt averse than most.”
And that claim comes from??? People having granted that claim when they… yes… borrowed legal tender into existence.
Now, those loans can’t be paid back without the people that hold the claims actually accepting goods and services in exchange for the legal tender (SPENDING IT)!
If they are unwilling to spend it without motivation, than clearly we need a tool to motivate those with legal tender to exchange it for the goods and services upon which they hold claim(spend), so that those with debt can repay the debt.
“Also, you keep insisting that the important thing is for people in the US to spend their money. People in the US already spend a heck of a lot of their money. The wealthy don’t.”
Actually, I thought I’ve been clear here too. It isn’t everyone in the USA that needs to spend more legal tender. Quite the contrary. It is just those without debt, and holding substantial legal tender holdings, and generating high incomes of additional legal tender, that need to spend more.
“And the young aren’t supposed to as they should be saving up for the time in life when they will spend their savings to live on, ”
This is another basic foundation of peoples’ economic beliefs that I’m directly challenging. In a nation with a negative international trade balance, It is simply IMPOSSIBLE for everyone to hold a net positive balance of legal tender. Well, at least not if we count everyone’s share of the government and business debt.
We’ve all been taught that we should all spend less than we earn. I’m pointing out how totally impossible that is, if we consider legal tender to be that savings mechanism. We can all own stock in companies, all own some land, all own some barter stuff. What we can’t all do is hold a net positive balance of legal tender.
“There is one other place that has a lot of US dollars that could spend them into circulation so they would be available for people in the US to pay down their debts. That is China. If they bought more US goods and services, that would help things out quite a lot. ”
Again, another point I make regularly. We’ve been running $650B a year net trade deficits, which can only be funded by new legal tender creation via unsustainable debt growth.
We need to attack and eliminate the international trade imbalances before we can stop borrowing new legal tender into existence at an unsustainable rate.
” That is why you get a lot of policy people talking about China letting their currency float against the dollar. Because that is what is needed for our goods to compete. That and a carbon tax which would act as a tariff on goods made in China powered by dirty coal.”
$3 an hour in China and $20 an hour in the USA. The float would have to increase the cost of imports by 7x before we become cost competitive. Other tools could be far more effective at balancing the trade, such as a tariff on legal tender leaving the USA.
The USA is also powered largely by coal. Any attempt to move off coal will likely revolve around importing a lot of wind turbines and solar panels from China, where they will be built with $3 an hour labor that would undercut and bankrupt any domestic sources attempting to manufacture them with $20 an hour labor.
Again, Darrell. I get most of your points. I just think you have to adjust your presentation or you aren’t going to communicate your points very well. You also might have to go backwards a few steps before going forward. Money Banking and Financial Markets was a 3 credit class at the b-school when I took it and basic Micro (also a 3 credit class) was a prereq. You are assuming a lot of agreement on basic definitions before you even get started.
Also, think about making the posts shorter. It is a web thing. I used to write a lot of really long posts. I got the impression that only a few people were actually reading them and fewer than that understood my points. I still write a long one now and again, but less is more in this context.
We can all own stock in companies, all own some land, all own some barter stuff. What we can’t all do is hold a net positive balance of legal tender.
I think this is the critical point. It’s not that people can’t accumulate wealth. They just need to be encouraged to do so in some form other than IOUs in order for the economic blood to circulate through the body.
Probably why greatly increasing wealth disparity presages depressions. Too much wealth in too few hands allows the rich to hold too much (of other peoples!) debt. Without enough money left over for those who are in debt, they can’t afford to pay those debts.
Probably why greatly increasing wealth disparity presages depressions. Too much wealth in too few hands allows the rich to hold too much (of other peoples!) debt.
+1, alpha.
A depression is just a broad-based encounter with the debt-service wall by a significant fraction of the population.
It can happen to individuals without derailing the global economy. But when it happens to the masses, look out.
You can save, he can save, but in a real sense society as whole can’t save. If everybody had $10,000 of extra money in the bank that they wanted to spend, prices for the goods that they wanted to spend would go up. It would make no difference whether that money was there because they were handed it by the governmen or everybody foregone consumption to save it.
Absolutely false. Your labor outputs a commodity of some form. It may be pork bellies, energy, or digital bits in a movie. To the extent that the exchangeable value of the commodity you output is higher than your needs for life, you and the rest of society are able to save. Doing so is called living below your means.
“Actually, I thought I’ve been clear here too”
No, you are eroding clarity with every sentence. A veritable butchery of it. Reading the Bits is increasingly a corrosive experience for it.
Cognitive dissonance hurts.
“No, you are eroding clarity with every sentence. A veritable butchery of it. Reading the Bits is increasingly a corrosive experience for it.”
Well that’s one opinion. For me, I’ve always understood that there’s a connection between the massive trade deficit and the massive debt, but I’d never considered exactly how that works until Darrell began posting his theory. I agree with Polly that the discussion seems to focus on definitions that need to be agreed on first rather than what he’s actually saying, but I think as time goes by more people on this board are going to come around to what he’s proposing. It’s right. The only way you can create ‘legal tender’ is by offsetting it with debt. If there is no offsetting debt, then the new ‘legal tender’ is worthless and prices adjust upward accordingly.
The butchery comes in by mixing definitions. Legal tender — define it. Debt - define it. Asset backed currency - define it. FIAT currency - define it. The butchery comes in because Darrel is inaccurately using language. He is trying to saw a log with a pick axe. He’s just using the wrong tools for the job.
For instance, “legal tender” is a derived instrument. The state determines what instrument will by law satisfy a debt.
From wikipedia:
In the UK, legal tender is solely for the guaranteed settlement of debts, and does not affect any party’s right of refusal of service in any transaction.[16]
In the 19th century, gold coins were legal tender to any amount, silver coins were not legal tender for sums over 2 pounds, nor bronze for sums over 1 shilling.
As you can see, gold was at one point legal tender.
Paper currency:
Its roots were in merchant receipts of deposit during the Tang Dynasty (618–907), as merchants and wholesalers desired to avoid the heavy bulk of copper coinage in large commercial transactions.
Read more about it here:
http://en.wikipedia.org/wiki/Paper_currency
So yes, paper currency originated as debt in the form of an IOU for a commodity (gold, silver, or copper). Until 1971, this was the case in the United States. Actually, first by executive order (6102) then by the Nixon Shock, the precious metal backing the US dollar was actually legally(arguably) stolen from those holding US silver certificates.
From a wikipedia reference:
the growing U.S. balance-of-payments deficit meant that foreign governments were accumulating large amounts of dollars — in aggregate volume far exceeding the U.S. government’s stock of gold. These governments, or their central banks, could show up at any time at the “gold window” of the U.S. Treasury and insist on trading in their dollars for gold, which would precipitate a run. The issue was not theoretical. In the second week of August 1971, the British ambassador turned up at the Treasury Department to request that $3 billion be converted into gold.
Darrell
I’ve said this before, but you really don’t seem to get that you’re sounding progressively more unhinged. You appear to be so invested in this argument you’ve created that you’re unwilling to address its obvious presumptive flaws. Here are several:
One. Money is not necessarily debt. Money is an agreed-upon medium of exchange between two presumably equal units of worth. “Debt” does not enter into the equation.
Two. Money is not necessarily “borrowed into existence.” It can be grown, mined, created, salvaged, scavenged, conjured, or simply contracted and assigned. Your understanding of human endeavor is seriously lacking in imagination if this is the only way you view commerce.
Three. You ignore the fact that large portions of human interaction are motivated by altruism, not accounting– and that many societies do/have gotten along just fine without money of any sort.
Perhaps you’re speaking only of American/Westernized banks and banking institutions? (Not commerce.) If so, you need to redefine your parameters.
You are using a different definition of money than he is.
Darrel’s posit is interesting to think about - but Mathguy raises some questions.
One area I agree with Darrel on is Polly’s point above about bank debt. Clearly when a bank funds loans 50 times their equity they are doing exactly what Darrel suggests.
Where I think his theory breaks down is the Goods produced (not Services as they generally are not tangible) create the wealth of a nation therefore it’s ability to support it’s printed fiat. Yes, Services are of value when traded outside of a nation’s borders as would be net financial transactions back to the entitled country (but we all know that this isn’t happening right now).
Goods are also current and “capital” and therefore have a depreciable life cycle which I would argue the UCC represents the value of the legal tender in existence within any given country.
Darrel, I am not trying to counterpoint, but I think your biggest hole is retained earnings. I do appreciate your thoughts.
The government panders to every identifiable interest group out there. Why doesn’t it pander to renters, 35% of the population?
Home owners and debtors are not a monolithic voting population. Renters probably share more similar circumstances are probably a bit more similar than home owners/debtors.
As far as renters go, it’s like the line from CCR’s “Fortunate Son” - “When we ask them how much should we give, they only answer, ‘more, more more’”
Renters don’t donate enough money.
When renters band together and form a super pac that can donate 10’s or 100’s of millions of dollars to politicians then they will be pandered to.
corporations are people
Money is free speech
It’s the law of the land.
Renters generally aren’t of the HBB variety. They tend to be young and poor. Donate? They barely register to vote.
Renters generally aren’t of the HBB variety. They tend to be young and poor. Donate? They barely register to vote.
Depends on where you live. Some cities have a higher percentage of renters than home owners.
From the 2010 Census:
While homeowners were the majority in most of the nation’s metro areas, they were outnumbered by renters in many of the country’s largest cities, including the four most populous cities. This was similar to 2000. In New York, renters made up 69.0 percent of households, followed by Los Angeles (61.8 percent), Chicago (55. 1 percent) and Houston (54.6 percent).
Because the landlords have not formed a union and lobbying organization like the Realtor’s and mortgage originators?
Votes come from money, so if you don’t have an organization designed to lobby congress, you get no love.
The economy still has major issues, that need to addressed. We are past the point of just saying recovery, Retail sales up…
We need some hard facts, and hard decisions to fix this mess
http://www.dailyjobcuts.com
The Triffin Dilemma
It seems to me the Triffin Dilemma’s paradox is that many nations around the world had surpluses, and would want to exchange their dollars for gold, but other nations had deficits but no gold so needed a supply of new dollars. With everyone defining their local currency in terms of gold, there was no way for exchange rates to fluctuate to adjust to the situation.
Removing the gold peg should have allowed exchange rates to adjust and force us to STOP importing more than we were exporting, but the world, hungry to sell to US consumers would not allow exchange rates to adjust, and US consumers enjoying the benefits of being able to consume the lion’s share of the output of 2 billion impoverished workers’ labors did not force the issue.
I find it amazing, that despite decades of massive trade deficits flooding the world with excess dollars, that so much of the world continues to trade us stuff for our IOUs.
As for the proposed IMF currency, I do not see how it has value unless it is borrowed into existence. Proposals have been made to distribute shares according to voting rights. Do those voting rights them move with the currency? China walks in with $3T and says to the USA, either you get 200% inflation, or you hand over your IMF voting rights to get back all these dollars?
If not a need to get them to payback debt, what gives the proposed international currency value?
You make the mistake of assuming that the money supply belongs to anyone but the central bankers who are letting the rest of the planet use the wealth they control. THEY determine what it’s worth, who gets to use it and at what apportionment, what it will cost to use it, and how it will be collected and reapportioned BACK TO THE CENTRAL BANK(S).
International laws prevent organized governments and entities from issuing their own “money” (at least if they intend to trade with the rest of the planet,) and anyone who tries to go outside the system (say by selling their natural resources, ahem, oil, at an independent price structure, ahem, Iraq under Saddam, or Iran with their own oil bourse,) is subject to “sanctions” or military “intervention.”
But there is no actual “debt” involved, as Greece has been showing Germany. (”Okay, EU. We default, your central bondholders go under. So. How much you want to negotiate? 40% off? 50%?) In actuality, there is only the agreement of the various world governments to allow the central banks the power to hold their populations hostage– and often, that doesn’t turn out so well.
So, legal tender is borrowed into existence, it is always equally offset by debt. Those that have debt can’t possibly pay it back, unless those with legal tender first spend the legal tender they hold.”
yep. So I expect the treasury will have to do a reverse split on the dollar making new dollars more valuable than dollars promised today. Companies do this with stock all the time.
I think Mexico did this and the president was barked at by his people ( he promised to defend the peso like a dog) after that, plus it wiped out the middle class.
what else can they do ? And why are people still buying this mountain of debt ? are they really smart? or have no choice? Or they don’t beleive the treasury can devalue the dollar and they will be the kings of deflation?
what else can they do ? And why are people still buying this mountain of debt ? are they really smart? or have no choice? Or they don’t beleive the treasury can devalue the dollar and they will be the kings of deflation?
Just looking for an alternative. I’d have gone all in on stock a couple of years ago or so if it didn’t feel so manipulated. And I’m still waiting for them to stop manipulating real estate. What can I buy that will hold its value that isn’t currently artificially inflated?
What can I buy that will hold its value that isn’t currently artificially inflated?
When you find the answer to this question, would you please share it with the rest of us?
“…When you find the answer to this question, would you please share it with the rest of us?”
“Comment by Cantankerous Intellectual Bomb Thrower©
2012-02-05 00:28:55
“…what portion of that could be devoted to a mortgage payment, the cars, school loans, etc…”
We’ve been paying 21% of our income on rent, and have seen no rent increase for three years running, while our income increased slightly. I wonder how this compares to the amount the average homemoaner throws away on their mortgage?”
Let’s see….
$148K pretax. $19800 mortgage payments = 13% of gross. But, about half the mortgage payment goes to principal reduction. If I just count the $800 a month that goes to interest, tax, insurance then it is more like $6.5% of gross.
If I slice off $25K to income taxes, $8K to Social Security, $7K to 401(k) and $5K to insurance premiums including medical reimbursement… Call it $100K net. That would make the full mortgage including principal about 20% and the ITI about 10% of net income.
Our non-mortgage bills are about 3x the mortgage.
“But, about half the mortgage payment goes to principal reduction.”
Good luck with that. The interest payments are front loaded on a mortgage so you don’t actually start reducing the principal significantly until about a third of the way through. During the first years it is more like 10% goes to principal reduction. You are just renting from the bank.
It depends on the interest rate and the amortization period.
On a 15 year mortgage at 3.5%, more than half of the first payment goes toward amortization and less than half of the first payment goes toward interest.
But, but, but nobody told me I could lose money.
I WAS ROBO SIGNED!
History says home real estate is a bad investment
By Larry Swedroe
February 1, 2012 10:39 AM
(MoneyWatch) While the housing bust showed many people the dangers of investing in residential real estate, investors could have realized this long before, simply by paying attention to history.
http://www.cbsnews.com/8301-505123_162-57369547/history-says-home-real-estate-is-a-bad-investment/ - 106k -
“History says home real e$tate is a bad investment”
“…And the gate is open and bolting out in the lead for this week’s “Eeyore Award” trophy, it’s jeff saturday blazing into the 1st turn snortin’ with steam…in 2nd, … it’s ol’ Cantankerous already gripin’ the whip, followed closely on the inside with her heels a kickin’ up mud in every direction, … it’s sammy $chadenfreude”
This race is being $ponsored today by:
“$uzanne researched it!”:
The apartment to home $weet home National moving Company with offices in your friendly neighborhood.
Also by:
“Fannie & Freddie & Sallie Mae Govt’Inc.”
“Working hard to provide everyone in America with a taxpayer guaranteed loan regardle$$ of income or intellect.”
and also by MegaBanker$Inc.
“We don’t make our monie$ until we find a way to $ell you into debt$!”
“Now folks coming outta the 1st turn, … it’s”
“Now folks coming outta the 1st turn, … it’s”
Mr. Quiggly!
http://www.youtube.com/watch?v=MlYCBJSYWBQ - 157k -
Guess is was just a matter of time. Insurance company dropped me this year, replacement quotes are close to 2X the old quote. I live in Hobe Sound, FL; so, this is a pretty common occurrence down here, but, man, there goes a few thousand bucks that won’t be stimulating the economy.
Just for a point of reference, my old insurance was about .5% of the house value for a 2.5K deductible with 11K hurricane deductible. The new coverage is coming close to 1% of the home value (not including flood, another .25% or so).
It’s shocking that there’s not insurance companies willing to write down here. Yes, we get hurricanes. But, the house is built out of concrete. Unless it’s a cat 5 direct hit, the worst that’s likely to happen is the roof is damaged. And I’m paying the first 11K (that buys a lot of roofing). I guess they are planning for the 100 year storm, but, man, that really seems like an unreasonably high amount to me.
Just for a point of reference, my old insurance was about .5% of the house value for a 2.5K deductible with 11K hurricane deductible
Wow! Ours is 0.2% with a $500 deductible. No hurricanes out here.
Mine is .01% with a $250 deductible (we paid extra for that), and we get hail and tornadoes.
That just isn’t fair, Obama should fix this so we all pay the same rate across the country. Everybody , including renters, should be forced to have insurance so we can lower the costs for everyone.
j/k.
Mmmm … maybe I need to shop around.
I have AAA home and auto insurance. My auto and home insurance is surprisingly cheap.
I realize that hurricanes are big destructive events, but, still, this house has already been through 3 major storms without a broken window. It would really have to be a 100 (maybe 1000) year storm to level this house. Doing damage is one thing, but, leveling it is something entirely different.
.2%.. Man, that sounds nice. And that 1% is with huge deductibles (2500 and 11K for hurricanes). A few more years and it will be close to my old rent payment just for insurance (forget taxes, HOA and, of course, the LOAN on the house).
Wow!
.01% is $50 a year on a half a million dollar house. Did you, perhaps, mistype?
Yes, I did. 1%.
I’m paying about $700 to insure a 350K house.
“but, man, there goes a few thousand bucks that won’t be stimulating the economy.”
Hey, cut with the “negative waves” overtaxed, “they” have run out of idea$!
The $uffering $o’s, what would America’s eCONomy be with out ‘em? Oh, my!
Lifestyle:
Kozlow$ki became notorious for his extravagant life$tyle. supported by the booming stock market of the late 1990s and early 2000s; allegedly, he had Tyco pay for his $30 million New York City apartment which included $6,000 $hower curtains and $15,000 “dog umbrella stand$”.
According to Forbes, Kozlowski also purchased several acres in the private gated community, “The $anctuary”, in Boca Raton, Florida, while he was CEO at Tyco International. He also purchased a multi-million dollar oceanfront e$tate on the i$land of Nantucket.
Tyco paid $1 million (half of the $2 million bill) for the 40th birthday party of Kozlowski’s $econd wife, Karen Mayo Kozlowski. The extravagant party, held on the Italian island of Sardinia, featured an ice sculpture of the Statue of Michelangelo’s David urinating Stolichnaya vodka. This birthday bash was di$guised as a $hareholder meeting in order to get corporate funding. In a camcorder video, Dennis Kozlowski states that this party will bring out a Tyco core competency - the ability to party hard. Subsequently, this $hareholder meeting/birthday party became known as the Tyco Roman Orgy.
Insurance=leveraged statistical bet. If it was me I wouldn’t even consider risking my money in anything within 30 miles from the major coast lines. Tough call but maybe you could look for a supplemental policy?
Yikes. Our escrow is like $200 a month, half that to property tax and half to insurance. That puts the insurance at about 0.1% of house value.
Of course, no hurricanes or tornados. Hail storms are pretty rare. Not in a flood plane, nor near an ocean. No forest fires. No ice storms bringing down trees onto houses….
We just get those pesky 115 degree days in the summer, but they don’t really destroy houses.
I guess they are planning for the 100 year storm, but, man, that really seems like an unreasonably high amount to me.
Insurance companies have lots of investments on their books, and when they perform poorly they make up for their losses through higher rates. I saw this pattern of rate increases for businesses in California following each recession.
Insurance companies have lots of investments on their books, and when they perform poorly they make up for their losses through higher rates.
That’s part of the reason why I think my Goldman Sachs-owned health “insurer” is jacking up its rates. Not to mention their numerous legal troubles. I’m sure all those legal fees are starting to add up.
Insurance companies charge what they payout in claims. Profit is made by investing the money.
And what do they do when they lose money on those investments but have a “right” to a healthy profit?
And what do they do when they lose money on those investments but have a “right” to a healthy profit?
Which comes at the expense of those of us who pay the ever-increasing insurance premiums.
Agreed rms.
My CA. homeowner’s got doubled in one year with no claims on it. EVER.
Over–
You might want to consider reducing your coverage to what you think the actual damage might cost to repair (to your satisfaction.) Are you including land value in the coverage? Would you be okay with cheaper windows? Would you be okay with a $200K rebuild on your property instead of a 500K one? What if you could get your brother-in-law to repair (say,) water damage?
Then there is the awful reality that if your home IS damaged or destroyed, the chances of the insurance company settling for the full limit of liability (even in the event of a total loss,) is unlikely.
“Looking at the longer-term data, we also see quite a different picture. For the period 1890-2005, inflation-adjusted home prices rose just 103 percent, or less than 1 percent a year. One can only imagine how many fewer investors would have piled into the residential home market if they were aware of the historical evidence.”
Note that the only returned referenced is the capital gain. What about the income return? What about the rent you don’t have to pay? That is the real value of owning a home, and if you are paying too much relative to that rent, it isn’t worth it.
You can say the same thing about our 2.0% S&P 500 dividend yield. I’ve heard that the gain in inflation adjusted stock prices without re-invested dividends is also less than 1.0% per year.
I wonder if that is “same houses”. Four of my grandparent’s house would fit into the average suburban house of today.
They were 500 sq ft? My parent’s Orange County house in the 1960s was about 1500 square feet. I know there are a lot of McMansions these days, but they aren’t the norm, at least not where I live.
Their WWII cottage was probably around 800 ft2. My parents added another 600 ft2.
Toward the end of their lives, my grandparents and my uncle lived in an apartment that was the same size as the first floor of my family’s house. Place was huge.
And the other people in the building? Why, they were at least half the fun of visiting my grandparents.
I have fond memories of that place.
“Their WWII cottage was probably around 800 ft2″
Was that the average back then? I’ve seen more than a few houses of that vintage in my little burg, and they tend to be bigger than that, maybe 1200 sq ft. Of course, I can’t assume that my area is representative of the era.
Supposedly from Census:
In 1950, the average square footage of a single family home was 1,000
square feet
In 1960, the average square footage of a single family home was 1,200
square feet
In 1970, the average square footage of a single family home was 1,500
square feet
In 1980, the average square footage of a single family home was 1,595
square feet
In 1990, the average square footage of a single family home was 1,905
square feet
In 2000, the average square footage of a single family home was 2,265
square feet
Another interesting thing to keep in mind is that the typical American nuclear family got smaller during those decades. When I was kid in the 1970s, I knew a bunch of (mostly Catholic) families that had four kids. That’s pretty unusual for young parents these days.
When I was kid in the 1970s, I knew a bunch of (mostly Catholic) families that had four kids. That’s pretty unusual for young parents these days.
Same here. I was an only child back then.
It wasn’t until much later in life that I heard my mother’s very polished response to all the personal questions she got: “I had a perfect child the first time, and I couldn’t figure out to do for an encore.”
I got the impression that Mom had given that snappy answer quite a workout.
Blue- Thank you, interesting stats.
All -I think the concept of a LR & FR is an era gonebye. It’s redundant to me. I see a change in our fellow baby boomer friends. Many are tired of more space than they live in. No chit. I use to call our home “the woman killer”. LOL
I wonder if the price of a college education would drop if a student loan limit was set at $60k? After 5 years probably by no more than 35%-45%.
Delta: Housing market momentum slows in Washington area
By Alyson Bode, Published: February 5
Price and volume growth in the Washington area’s housing market appears to have slowed in the last quarter of 2011 following talk of federal budget cuts and a government move to lower the size of mortgages that could backed by Fannie Mae and others.
The so-called conforming loan limit for high-cost housing areas such as the Washington metropolitan area fell to $625,500 on Oct. 1 from a previous limit of $729,950 for Federal Housing Administration, Freddie Mac and Fannie Mae-backed loans, possibly limiting pricing and volume in the fourth quarter of 2011. Congress restored the higher limit Nov. 17 for FHA loans, but the lower limit continues to apply to Fannie Mae and Freddie Mac loans
http://www.washingtonpost.com/business/capitalbusiness/delta-housing-market-momentum-slows-in-washington-area/2012/01/30/gIQAjn29rQ_story.html
If price and volume are inverse — ie when volume goes up then price would go down — then how can they both slow at the same time?
Volume is down because prices are inflated even though they’re off their insane highs. Get prices down to reasonable levels and watch the inverse volume/price action take hold, i.e, even lower prices as volume increases.
Price and volume are inverse in a normal market. The are correlated in a speculative market.
If both price and volume are falling, either it is the end of a speculative market or there is some other factor other than price that is driving down volume.
Is it mere coincidence that the BDI has plunged below its 2008 global financial crisis low, or is this a primary indicator that the global economy is experiencing a flashback to peak crisis conditions?
I’m assuming it’s all contained until I see other evidence to the contrary.
Fall in baltic dry index worrisome for shipping costs
Published on Mon, Feb 06, 2012 at 11:05 | Source : Moneycontrol.com
Updated at Mon, Feb 06, 2012 at 17:47
The Baltic Dry Index (BDI), a measure of costs for major shipping commodities on Friday fell to its lowest level in more than 25 years as sluggish demand prompted ship owners to not deploy vessels in the sea. The situation indicates that the worst is still not over for the shipping industry, say analysts.
According to the data released by Baltic and International Maritime council, the BDI plunged to an all time low of 647 points,then the previous low of 663 points recorded in 2008 amid a global financial crisis.
In the past 26 years since the Baltic index came into being, the index had never slipped below 650 points and the current fall in the Baltic has raised serious concerns among shipping companies.
A slump in BDI directly correlates to a decline in time charter rates of shipping companies. Indian shipping companies like Shipping Corporation of India , Mercator Lines and GE Shipping might see a decline in their charter rates for dry bulk, which will be closer to their operating cost, thus impacting their margins.
Analysts say the recent fall in the freight rates is due demand supply gap in the market. This year alone about 95 million dead weight tonnage will be added to the global shipping industry. This growth in fleet is expected to be around 10% more than the last year. However, the demand is growing only by a meager 4-5%.
…
It was pointed out yesterday, here, that only the prices have down while the volume remains relatively the same.
It’s worth noting that for given market fundamentals, low prices and high volume go hand-in-hand, and conversely. This is why, for instance, efforts to prop up U.S. housing prices led to the lowest sales transactions flow in the history of modern records.
March 23, 2011, 11:30 a.m. EDT
Sales of new U.S. homes tumble 16.9% to record low
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Sales of new single-family homes collapsed in February, the Commerce Department reported Wednesday, as a combination of high unemployment, tumbling prices and a glut of cheaper alternatives brought activity to a near-standstill.
New-home sales fell 16.9% to a seasonally adjusted annual rate of 250,000 in February, though January’s figures were revised higher to 301,000 from 284,000. Compared to February 2010, sales collapsed by 28%.
Every region but the West saw record lows, and in the Northeast, sales dropped by 50% compared to year-earlier levels. Read “Dismal home-sales data tell us nothing new.”
“The housing market has literally collapsed,” said Tony Sanders, a real estate finance professor at George Mason University. “We’re stuck, it’s not going to revive in the spring and may not in the summer.”
…
I’d give anything to read OlympiaGal riffing on the word “tumble.” She loved that word.
Comment by Olympiagal
2008-03-28 14:50:17
“The number of homes sold tumbled 43 percent in the quarter, KB Home said. The value of the company’s backlog… fell 59 percent. The number of homes in backlog tumbled 57 percent. Orders tumbled 83 percent in both KB Home’s Southwest region… KB Home got contracts for the most houses in the quarter in California. Still, orders in California fell 63 percent.”
That’s a whole lotta tumbling going on. Why, it’s like the Gymnastics of Doom! With medals and applause for the biiiiig winner, KB Homes.
I don’t even mind the overuse of the word, because it is such a pretty, pretty word for me to read on this windy Friday afternoon.
LOL… Thx for sharing, Allena!
Miss our girly-tomboy mediator so much some times. And it’s so danged windy outside tonight. Spread some’a that pink tiara glitter along the Olygal way for us to follow will ya, girl…?
Mwah.
+1.
Sniffle.
My guess is supply is not growing like it was 2-3 years ago. I’m not sure how far in advance shippers contract to build boats. It this is the case the lastest drop may be more about demand then supply. Just a guess though.
I’d say it’s about a so-called “time-to-build” effect coupled with an epic crash in shipping demand. Since euphoric investment decisions that produced today’s supply were taken years earlier (as you suggest), and nobody could have seen the demand crash coming, there is an excess of shipping capacity with plummeting prices as a result.
“When supply exceeds demand the result is… Anyone? Anyone? Buehler?”
BTW, what’s “meager” about a four to five percent growth rate? The sweet spot for an economy’s growth is in the four to five percent annual range.
“The sweet spot for an economy’s growth is in the four to five percent annual range.”
Based on what???? Instead of 9 or 10%? Or how about 7 or 8%?
The insatiable corporate maw demands 10% growth, and will take it out of hides if they can’t achieve it.
I said growth of the overall economy, in terms of the inflation-adjusted value of all the goods and services produced. Go much above 7% and it’s unsustainable for more than a few years. Right now we’re at about 2%, which is way too low.
China GDP has been in excess of 7% for 35 years with the exception of a few years.
Considering you’re arbitrarily selecting GDP growth rates, what should lending rates be? 6? 7? Why? Why not 8 or 9?
“I’m assuming it’s all contained until I see other evidence to the contrary.”
What’s “brown grass”? nutin but just a modified drought re$i$tant version of “green shoot$!”
“brown grass”
It’s a very suitable choice for Californians.
http://market-ticker.org/akcs-www?post=201563
Schawab gets it 90% right on the Fed’s crony capitalism.
“Capital and borrowing are not the same thing.”
Darrell, are you listening? (Wall St. too for that matter)
Again, this is exactly what I’ve said.
Capital is stuff. Building, plant, equipment, intellectual property. Capital is wealth. Wealth is what you buy with legal tender. Legal tender is what you borrow into existence to allow a trade imbalance in the flow of wealth, including capital.
Capital is a form of usable wealth. Wealth is what you buy. Legal tender is your or other peoples’ debt that you buy wealth with.
I think you actually wanted to direct this snark at dio and CTBT/PB. They are the ones attempting to live in the 1800s when barter currency was money.
I’m trying to draw the very wide line between wealth and money. That same line separates capital (a for of wealth) from borrowed legal tender(money).
ENOUGH!
You can build wealth. You can grow wealth. You can inherit wealth…. You do NOT need to “buy” wealth. Nor do you have to borrow it.
Now. Think really, really hard and do the macro.
Dollars are borrowed into existence. Once they exist , they can be traded back and forth, for gold or apples or services, etc, and some may end up with millions or billions of them, and owe nothing themselves. But the dollars were still all borrowed into existence originally, and therefore have offsetting debt to them somewhere in the system. This debt is often owed by the people who no longer have the dollars.
Most of our debts are payable only in dollars. Therefore to pay them, we need dollars.
If the rich hold most of the dollars- and won’t spend them, but would rather lend them out- there aren’t enough dollars left for everyone else to pay the debts that arose when those dollars were born into existence. That’s when the system breaks down.
That’s not what he’s said, but thank you, alpha, for this more narrowed definition. It makes a lot more sense than the blather that’s been spouted here recently.
(Nonetheless, I would argue that dollars, as in USD, are representational, not “borrowed.”)
From the link: We’re now in the 37th month of central government manipulation
Thank you, Wall Street Journal, I know how to count, and I call BS. The manipulation did not being under Obama. It began under Greenspan and Paulson, if not sooner.
And that manipulation saved the WSJ’s primary demographic’s bacon. They should have the grace to keep their big mouths shut.
(Hwy50 gets to be copy editor for yet another day!)
“Thank you, Wall $treet Jaundice, I know how to count, and I call BS. The manipulation$ did not begin under lil’ Opie…”
I thought the manipulation started in the late 1700s, just after this little thing called the Revolution. First Bank of the United States, Second Bank of the United States, Federal Reserve System, etc.etc. etc.
I think the point that both the original article, and the retort to that article miss, is the reason that there is no borrowing and spending off all that extra liquidity that the fed is injecting.
One says it is because people know they can borrow later, so there is no hurry. The other says that people don’t want to have to pay back the interest.
In reality, the real reason no one is borrowing is quite simple. Those that can borrow have no desire to. If they had any desire to borrow, they would have done so long ago. Those with a desire have already borrowed and spent, and are now tapped out.
I’m run the numbers before. Each household’s share of total debt was 2.8x median income in 1980. It is now 6.5x median income. And with the government still borrowing $1.3T a year new legal tender into existence to fund our $650B a year international trade imbalance plus our internal trade imbalances commonly referred as the widening wealth disparity (though this is as much a misnomer as money), that debt/median income ratio continues to increase.
The new liquidity being injected into the economy is sitting in banks, because we’re tapped out on our ability to carry debt.
The new liquidity being injected into the economy is sitting in banks, because we’re tapped out on our ability to carry debt.
Thank goodness they are able to earn a return on all of this liquidity, so that they can manufacture earnings and avoid us having to give them another bailout!
/snark
Lots of work for Ben. This is good.
World not ending – except maybe for shipping
By Ian Campbell
February 6, 2012
By Ian Campbell
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
According to a popular, although probably erroneous, reading of an ancient Mayan calendar, the end of the world is scheduled for Dec. 21, 2012. A look at the Baltic Dry Index, which reflects commodity shipping rates, might suggest the Mayan doomsday is indeed at hand. The measure of bulk shipping costs plunged in 2008, warning of the 2009 global recession. On Feb. 3 it closed below its 2008 low.
But it probably isn’t the end, at least not for global trade. The Dutch Centraal Planbureau keeps an eye on global trade volumes. Its world trade index plunged by 20 percent from April 2008 to May 2009. In November 2011, however, world trade volume was up by 28.3 percent from May 2009 and was 2.6 percent higher than the pre-crisis peaks in 2008. These figures don’t bear out Baltic or Mayan gloom.
But the minimal growth in trade from 2008 to 2011 helps explain the plunging BDI. The 2008-2009 stalling in global trade caught shippers by surprise. They expected – and were ordering capacity to keep up with – the remarkable 60 percent annual increase in trade from 2000 to 2008.
The result in what a Nov. 2011 report by PwC called a “distorted” world shipping market. The world’s fleet of 1,200 Capesize ships, the largest, is set to grow by a further 450 in the next three years. The BDI is responding to the over-supply of ships in an environment of positive, though not spectacular trade growth. The likely result is cheaper freight costs, which is good for commodity sellers, but not for shipping firms – nor for the banks which have lent to them.
Worries about global trade should not be entirely dismissed, however. Growth has been relatively weak since mid-2011. The euro zone crisis is no doubt a negative factor. Chinese demand may also be a little softer – though not soft enough to prevent Australia enjoying a record year for exports in 2011. It’s not yet time, thankfully, to see the Balts as modern messengers from the Mayans.
“The Dutch Centraal Planbureau keeps an eye on global trade volume$.”
Ha, what theys really is watching, is their $ecret campaign to get “Tulip$” accept globally @ funeral$
6 Feb, 2012, 04.14AM IST, MANU BALACHANDRAN & SURAJ SOWKAR,ET Bureau
Fall in Baltic Dry Index raises concerns among shipping companies
Read more on »merchant vessels|International Maritime council|freight rates|dry bulk goods|Baltic Dry Index|Australia
MUMBAI: The Baltic Dry Index, a measure of shipping costs for dry bulk goods, on Friday plunged to its lowest level after it touched 647 points, nearly 20 points lower than the previous low of 663 points recorded during the 2008 global financial meltdown.
In the past 26 years since the Baltic index came into being, the index had never slipped below 650 points and the current fall in the Baltic has raised serious concerns among shipping companies.
“At this level, it is difficult to even recover wages for employees. None of the shipping companies will be able to operate under these circumstances and we have to wait and watch what happens now,” said JN Das, director, Shipping Corporation of India (SCI). Shipping analysts, meanwhile, are expecting SCI to post massive losses in the current financial year.
The Baltic dry index has been falling steadily over the past one month even though shipping analysts had predicted a recovery of sorts for the shipping sector in 2012. Sea-borne traffic was expected to rise 20-25% in 2012 from the 1,500 level in 2011, but the alarming drop this year - it plunged by more than 62% - has left analysts clueless about the much-expected recovery.
…
Isn’t Greece where the world’s shipping tycoons hail from?
Isn’t Greece where the world’s shipping tycoons hail from?
yes I think so
Soon, it will be Korea.
Much expected recovery? Have they not heard that real estate prices in China’s larges cities are off 30+% from peak, land auctions have been pulling no bidders, and most construction projects are being halted in their tracks?
Oh, and co-worker from India says prices in his home town seem to have peaked and are now sliding there are well.
DOA foreclosure deal?
Foreclosure deal deadline arrives, not all states are yet on board
By David McLaughlin and Margaret Cronin Fisk, Published: February 5 | Updated: Monday, February 6, 3:53 AM
Feb. 6 (Bloomberg) — States that balked at bank liability releases in a proposed $25 billion nationwide settlement over foreclosure practices must decide by today whether its mortgage relief and reforms are worth the legal claims they’ll give up.
While some states have already announced their intention to sign the deal, others including California Attorney General Kamala Harris have yet to publicly commit in part due to terms that protect the banks from future litigation. Without Harris, the deal’s value will drop by several billion dollars, according to a person familiar with the matter.
The agreement is “beyond fixing,” said George Goehl, executive director of National People’s Action, a network of community organizations which advocates for fair lending and affordable housing.
“People are very disappointed in what this is going to be both in terms of dollars and release of claims,” Goehl said in a telephone interview. “We’re giving away the store.”
Most states don’t have the resources to go it alone and fight the banks in court, said James Tierney, director of Columbia Law School’s National State Attorneys General Program. States such as California that may reject the agreement must decide whether the time and money needed to fight for a better deal is worth it, given that the settlement provides immediate relief for homeowners, he said.
“How long does it take and how much better?” Tierney said of a state pursuing its own deal. “Is it so much better that it warrants the cost and delay?”
…
“…in part due to terms that protect the banks from future litigation”
+
“Most states don’t have the resources to go it alone and fight the banks in court…”
=
MegaInc. “Bidne$$” indemnification$:
“We’re $orry, we won’t do that ever again, really, we promi$e!”
Foreclosures at the high end increase across the Bay Area
By Pete Carey
Posted: 02/06/2012 06:09:18 AM PST
Updated: 02/06/2012 06:09:24 AM PST
The housing crisis, which first devastated borrowers who purchased lower-cost homes with subprime loans, has caught up with people whose wealth helped them hang onto their houses longer.
Throughout affluent communities in the Bay Area, million-dollar-and-up homes are increasingly being lost to foreclosure, or sold as a last resort for far less than their mortgages.
More than 1,500 Bay Area homes with mortgages of $1 million or more were scheduled for auction last year, more than double the number in 2008, according to ForeclosureRadar, a foreclosure tracking service.
“The fact is, upper-end folks are starting to feel the crunch,” said Barbara Safran, president of the Contra Costa County Association of Realtors.
Santa Clara County had more than 400 homes valued at $1 million or more scheduled for auction in 2011, the most of six Bay Area counties.
Anne Walker of Coldwell Banker in Cupertino has a $1.7 million foreclosure listing in wealthy Monte Sereno. Like others in their situation, the former owners have no interest in talking about it publicly.
“Most of these higher-end people are, like, 45 years old plus, and they’ve gone through all their assets,” Walker said. “It’s a really devastating situation for them. They thought they had planned. They had their kids’ college fund, they had their 401(k)s, the stock, the mutual funds, and they’ve been hanging on for the last three years. They’ve gone through everything, and they have nothing left, not even the house.”
No one is immune
Contra Costa County, which led the region in lower-end foreclosures, is now one of the harder hit on the high end, with about 300 homes valued at $1 million or more scheduled for auction in 2011. Even the exclusive country-club community of Blackhawk is not immune.
“About a year and half ago, we started receiving listings of foreclosures from Blackhawk. Prior to that, it was unheard of,” said Bryce Ellsworth of Windermere Ellsworth & Associates of Brentwood. “I sold a home in Blackhawk last year, on three-quarters of an acre, a beautiful pool and backyard and nicely done kitchen. It was $4 million on the previous sale. This time it sold for $1 million cash.”
A Danville woman whose daughter’s five-bedroom Blackhawk home is in foreclosure said, “She is just living in it, still trying to work with the bank, probably unsuccessfully. A lot of people just stay in their house until they can’t stay any longer.”
The woman, who asked not to be identified, said she thinks the economic downturn’s effect on small businesses is taking a toll on upper-end homeowners. “The recession’s going on forever,” she said.
…
Easy come easy go….why anyone would raid their IRA or 401K to pay a mortgage is really beyond stupid, no matter what your income is.
They’ve gone through everything, and they have nothing left, not even the house.”
…but thaBay Area!1!
Ayiyiyi, Windows Edit button strikes again..
““Most of these higher-end people are, like, 45 years old plus, and they’ve gone through all their assets,” Walker said. “It’s a really devastating situation for them. They thought they had planned. They had their kids’ college fund, they had their 401(k)s, the stock, the mutual funds, and they’ve been hanging on for the last three years. They’ve gone through everything, and they have nothing left, not even the house.””
Read that again and try to ignore the emotional cue words like “higher-end people” and “not even the house.” Middle aged couples who were once on the edge of wealthy if not actually wealthy, who had retirement accounts and savings for their kids education and investments and are now out of money. All the accumulated “safety” gone in a few years of unemployment and/or under employment. People who just didn’t get that things weren’t going to come back or at least not come back quickly enough for them not to adjust way down. People who had been living below their means or they wouldn’t have had all those savings in the first place, who couldn’t figure out a way to get by on even less, so all those years of savings are gone.
And these were the well-prepared people. The responsible ones.
It is terrifying.
And these were the well-prepared people. The responsible ones.
Building up a business takes time, and it’s difficult to let go of your experienced employees and sell-off the business assets when everyone else is doing the same thing. There are leases, not rents, etc., so things unravel quickly when the cash flow slows to a trickle.
The Problem- People plan or believe that good times are going to be here forever or bad times will be perpetual. Some observers might believe we all think the bad times are never ending. Frankly, I think the bubble years weren’t good.Those years were a grossly distorted abnormal period born out of the tech wreck and massive post 9/11 stimulus. I don’t think any of us here are old enough to have personally experienced “good economic times”. From my observations, the economy has been skewed, distorted and people displaced since 1980.
For a very large portion of the populace bad times are eternal.
We didn’t end up with half of the workforce population making $500 week of less because they thought the good times would last forever.
The economy has indeed, been skewed, distorted and people displaced since 1980.
“And these were the well-prepared people. The responsible ones”
Nah, they were just comfortably overextended, rather than hopelessly.
Responsible IMO is not being in debt and being able to go for three years without losing anything important.
Uhm, did you miss the part of them having multiple savings?
I think he missed the part where they didn’t inherit a couple mil from Daddy. Because that’s about the ONLY way you’re going to “be responsible” under criteria like that.
They blew through their savings to service large debts. For this to go on for three years and ultimately default on their mortgage says to me “irresponsible”. They were probably all nice people, but they weren’t able to be responsible. Part of being responsible is knowing when the party is over.
+1, Blue.
The fact that they burned through all of their savings so rapidly means they either didn’t have that much savings, or they were unable to adjust their cost-of-living to match their now-reduced means.
They had made LARGE commitments, beyond their ability to produce LARGE income.
“You gotta know when to hold em,
know when to fold em,
know when to walk away,
know when to run.”
- Kenny Rogers, “The Gambler”
This is another one of those situations where it would been helpful for the reporters to ask for more information instead of just telling the readers that these people had savings, 401(k)s, college plans, etc. The SF bay area may be the region that led the country in using home equity to finance consumption. Even though these people had 401(k)s, it is still possible that they were using HELOCs and “cash out” refinancing on an annual basis to support their standard of living. Their cash flow situation might have been such that they needed the value of the house to increase by at least 10% every year. In that case, the whole house of cards may have tumbled to the ground when house prices stopped going up. It may not have been necessary for someone to lose a job for catastrophe to occur.
“I think he missed the part where they didn’t inherit a couple mil from Daddy.”
This is something that concerns me about Mitt Romney. He seems like a capable leader and a basically decent man. But can someone born into wealth empathize with the problems of the average member of the 99%?
Blue Sky is right. These were not prepared people. With high RE you must be conservative. A $4 million house! Only if you can pay cash or have that amount in cash. The problem with the bubble was you had people with very high incomes using the same ration of debt that lower income people use. If you make $100K you might need to spend 3x to buy. If you make $500K you surely should not be buying $1.5M. That’s insane.
“…The woman, who asked not to be identified, said she thinks the economic downturn’s effect on small businesses is taking a toll on upper-end homeowners.”
“Small business”=real estate lady/construction contractor
Most of these higher-end people are, like, 45 years old plus, and they’ve gone through all their assets,” Walker said. “It’s a really devastating situation for them. They thought they had planned. They had their kids’ college fund, they had their 401(k)s, the stock, the mutual funds, and they’ve been hanging on for the last three years. They’ve gone through everything, and they have nothing left, not even the house.””
Oh, for pete’s sake. It’s just a house! And it’s not like there aren’t other houses to live in.
Yeesh.
“And these were the well-prepared people.”
Ah, no. No they weren’t. When you live a life of huge expenses, you’re not prepared for anything but for living in the moment, well above your life’s real ability to sustain. It’s the big blind spot for Americans: They can’t see that their spending and indebtedness is huge and foolish.
And these were the well-prepared people. The responsible ones.
It is terrifying.”
I saw this wacky movie once ” lazerus man ” set in the future, the pharmaceutical exec wanted the media exec to terrify the viewers so they would buy more drugs.
I thought that was an interesting angle on media
“The fact is, upper-end folks are starting to feel the crunch,” said Barbara Safran, president of the Contra Costa County Association of Realtors.
I know a couple of well to do families, and sure the low interest rates are squeezing them, but the slowdown in business is what’s really killing these folks.
And this massive restructuring has taught these folks that they were never really in the “club” as George Carlin called it, even if they owned small businesses.
Most of the million plus houses in my area have not moved in 3-5 years. People have dropped the price 20-50% and still they don’t move. This part of the market is going to get slaughtered in my opinion. Rich retired people who can’t make money anymore.
I think we should define “Rich”. IMO, it’s having 1mil cash or equivalents. Real estate, being very illiquid, does not count. Classic cars do not count. Only stocks, money markets, anything that can be liquidated in an hour is what I use to define the holdings that determine “rich”.
In 2005, using standard measures, everyone I knew was rich because they owned a $350k home (and owed 400k on it, never mind the ever rising values)
“Most of these higher-end people are, like, 45 years old plus, and they’ve gone through all their assets,” Walker said. “It’s a really devastating situation for them. They thought they had planned. They had their kids’ college fund, they had their 401(k)s, the stock, the mutual funds, and they’ve been hanging on for the last three years. They’ve gone through everything, and they have nothing left, not even the house.”
I guess they shoulda planned better huh?
Welcome to the 99%.
“Welcome to the 99.999% - A very small # will be winners at the end. MF Global investors have joined our ranks. At least those who unlike the Koch brothers and JPM didn’t get their money out at the last minute. It’s good to have friends in high places.
I would have to know what they did for a living prior to going bust to better understand how this happened.
Where they realtors or something ? I hear realtors are finally starting to lose their million dollar homes around here ( Ventura County ).
Care to comment on this story, Eddie?
Since I doubt Eddie will bother to weigh in, I will offer a comment. In the Midwest city where I grew up, there was a skyscraper located within a few blocks of where my dad worked, in a fairly depressed area of town. Once I asked him what he knew about it, and he indicated the building had been completed in the late-1920s, just before the Great Crash. After the onset of the Great Depression, it basically remained empty for years, and never really penciled out as an investment, as it was a white elephant by the time the economy finally recovered.
I’m not trying to suggest this might describe the future of Atlanta’s Bank of America plaza, or anything.
American Foreclosure Bottoms at Atlanta Tower Auction: Mortgages
Brian Louis and Mary Jane Credeur
Monday, February 6, 2012
Feb. 6 (Bloomberg) — The U.S. foreclosure crisis has risen to new heights.
Atlanta’s 55-story Bank of America Plaza, the tallest tower in the Southeast, is set to be sold at an open outcry auction on the steps of the Fulton County Courthouse tomorrow after landlord BentleyForbes missed mortgage payments. It bought the skyscraper in 2006 for $436 million from Bank of America Corp. and Cousins Properties Inc. in the city’s biggest property deal.
Since the property market peaked a year later, the 1.25 million-square-foot (116,000-square-meter) building has lost 54 percent of its value, Bank of America, its largest tenant, has reduced space and bond investors who helped finance the purchase are on the hook for losses, according to data compiled by Bloomberg.
“It’s a fine building, a beautiful building, and still very much a landmark,” said Kirk Diamond, senior managing director at broker Cassidy Turley, in Atlanta. “It just needs to be recapitalized and written down to a market level to be able to compete effectively.”
…
I’m sure the Chili’s in his nabe is still packed, so its all good.
I spent a bit of time travelling over the past few weeks. It seemed like everyone travelling had an iPad. Localized observations can be very misleading. My sis in Dallas insists that the Texas economy is kicking butt because within their circle of friends everyone is doing fine. When I mentioned the huge huge state budget deficit she waved it away saying “there are pockets of poverty” (this is the same sister who tried to get me into flipping houses).
Today’s news says 27% of the Texas population has NO emergency funds.
Today’s news says 27% of the Texas population has NO emergency funds.
I’m surprised it is that low. More than 27% of the population are idiots.
“Them boys ain’t right in the head.”
I see you’ve been there.
lmao about TX. Careful. Jonesy is from TX.
I can’t say I disagree with you though. We had a whole crew of Texas bugger flingers come up from Texas on a project back in the early 1990’s. They bankrupted a 120 year old New England company with their BS.
“I’m not trying to suggest this might describe the future of Atlanta’s Bank of America plaza, or anything.”
Well, then again, what were the Chine$e & Canadian$ doing with all their extra monie$ back then, buying farmland in the heartland of America?
ISTR watching a video about the ghost towers of Bangkok. They were built during the Thai boom years of the 1990s. Many were never occupied, and nowadays they’re just sitting there, rotting away.
Can’t find the video anymore, but here’s a slideshow.
Empire State building did not turn a profit until the 1950s. 20 years in the hole.
POOF!
‘Man In Full’
Atlanta’s boom and bust property market set the stage for Tom Wolfe’s 1998 novel ‘A Man in Full” that portrayed an ego- driven Southerner who builds an empire of office complexes.
It’s now squarely in the bust category with the highest rate of late payments for loans on offices bundled into bonds among the largest U.S. metropolitan areas, at 25.3 percent, according to data compiled by Bloomberg. That’s increased from 10.4 percent a year ago and is more than triple the 7 percent national rate. The rate for payments 60 days late or more was higher than Cleveland at 23.4 percent and Phoenix at 23.3 percent, the data show.
The $363 million Bank of America Plaza loan became delinquent in December after BentleyForbes stopped making payments, pushing the overall delinquency rate on CMBS debt to 9.32 percent, according to Moody’s Investors Service. The loan was partly packaged inside JPMCC 2006-LDP9, which was downgraded by Fitch Ratings in December because of expected losses.
C. Frederick Wehba II, president of Los-Angeles based real estate investor BentleyForbes, didn’t return calls. Bud Perrone, a spokesman for LNR Partners, the special servicer tasked with handling the loan, declined to comment.
…
Atlanta’s boom and bust property market set the stage for Tom Wolfe’s 1998 novel ‘A Man in Full” that portrayed an ego- driven Southerner who builds an empire of office complexes.
I can still recall Cap’m Charlie mentally comparing his mistress’ lithe body to his thick shouldered, adipose wife. Heck of a guy!
At fifty percent of overall sales, those pesky foreclosure sales must certainly be dragging down home sale price statistics for Snohomish County, Washington.
Published: Monday, February 6, 2012
Half of county home sales were foreclosures or short sales
By Amy Daybert, Herald Writer
Nearly half of all single-family homes sales last year in Snohomish County was either a short sale or foreclosure, according to Washington Property Solutions, a short sale negotiating company based in Bellevue.
For the entire year, 7,771 single-family home sales were closed in the county, according to the Northwest Multiple Listing Service, a real estate organization that compiles home listings and sales information for 21 counties in Washington.
Distressed properties — or those that are short sales or foreclosures — accounted for 49 percent of the sales in the first and final quarters in 2011.
Those property sales accounted for 46 percent of home sales through the second and third quarters of the year, according to Washington Property Solutions, of Bellevue, which analyzed the listing service’s information.
Distressed properties also made up half of all single family home sales for the year in Pierce County, and about a third of all sales in King County, according to the company.
While the percentage of short sales remained steady from 2010 to 2011, there was an increase in bank-owned property sales last year, according to Richard Eastern, founder of Washington Property Solutions.
“The bank has to do something with their inventory,” Eastern said. “I can’t emphasize enough that the large number and lower price of bank-owned sales pull down property values overall, causing more homeowners to be underwater and enter into short sales territory.”
…
This story brings to mind a scene in the Wizard of Oz movie, where the green-faced witch watches the sand sift through her hourglass as time runs short for Dorothy to survive.
Feb. 6, 2012, 9:21 a.m. EST
U.S. stock futures drop on Greece worries
Greek party leaders struggle to agree; Europe stocks decline
By Polya Lesova and Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — U.S. stock futures dropped on Monday, as party leaders in Greece struggled to agree on another dose of painful austerity measures, with the threat of default looming large once again.
“Greece’s hourglass is running out of sand as officials scramble to turn it over again,” said Peter Boockvar, equity strategist at Miller Tabak.
…
They are looking for an answer to the question, “How do you run a large trade imbalance without new debt/legal tender creation at an unsustainable rate?”
The answer, of course, is that you can not. They do not like that answer. The Euro was created to persist trade imbalances within member countries, and those trade imbalances come with unsustainable debt growth, as the new legal tender is borrowed into existence to fund the trade imbalances.
What Greece needs to do is become Germany with its dam-able rivers, large coal deposits, and mineral deposits. Or, perhaps they could become Frace with their vast farm lands, energy resources and centralized trade hub location. Being little but a lifted up coral reef in the back corner of the Med doesn’t seem to be working out so well.
Eyes won’t worry to much ’bout that hour gla$$ thingy, there’s a larrrrrrrge bucket full of water, right close by …
Dumb question of the day:
Which presidential candidate is most likely to rein in the ’screw-you’ financial services sector?
RP.
If this were 2004 or 2008, Dennis Kucinich. He needs to run as Ron Paul’s VP.
I’d even voter Ru Paul before any of the GOP ClownCar candidates. I think Ru has better chance of winnning anyways.
The one that creates a consumer protection agency?
+100 !!
Also please note who voted for Dodd-Frank, and who voted against. Hint: if it hadn’t been for a retiring reasonable conservative, D-F would not have passed at all.
Forget who passed it. How about who wants to repeal it?
Let’s fact it, it isn’t the “issues” and the common good driving these politicians. They’re paid hirelings.
The Medicaid-industrial complex used to own New York State’s Democratic Party. Then they started supporting Republicans, and playing the two parties off against each other, to get even more money. They really cashed in for a while.
New York Medicaid has been getting “reformed” ever since. Wall Street had better hope that they don’t end up with Obama and a Democratic Congress again. This time, they won’t get a slap on the wrist like Dodd Frank. They’ll get the top 5 banks broken up into 20 on anti-trust, anti- too big to fail grounds.
Wall Street had better hope that they don’t end up with Obama and a Democratic Congress again. This time, they won’t get a slap on the wrist like Dodd Frank.
They did get Obama with Democratic congress. Nothing happened and nothing will happen. Past behavior is a good predictor of future behavior. Wishful thinking is not.
You miss my point. In 2008 they gave money to Democrats. Since then they’ve been giving money to Republicans. That changes things.
You miss my point. In 2008 they gave money to Democrats. Since then they’ve been giving money to Republicans.
The last thing they want is a lame duck president and looking to cement his place in history. They’d be OK with a lame duck president who is looking forward to a high priced speaking tour after leaving office.
Used House Pimps….. love that expression.
Am picturing Harvey Keitel’s character in Scorcese’s “Taxi Driver”, but he seems more ethical and honest than any Realtor® I’ve encountered…
I’m sure glad Flloyd Blankfein has come out stating he supports same sex marriage. Just like a petty thief playing the shell game on the public.
http://dealbook.nytimes.com/2012/02/05/blankfein-to-speak-out-for-same-sex-marriage/
Blankfein would put it to you regardless of sexual orientation.
Grab your ankles, he ain’t fussy.
So he’s doing the work of which God again?
The gods of the left. Not a huge surprise but timing is a suspect.
May be he’s trying to co-opt the occupy crowds?
wow…next he’ll be complaining that his effective income tax rate is too low.
Realtors Are Liars,
Bankers Are Scum,
Doom to the bastard
who becomes one.
Citibank to issue credit cards in China.
http://money.cnn.com/2012/02/06/markets/citi_china_credit_cards/index.htm?iid=HP_LN
Now the Chinese working class will learn the meaning of debt slavery. I somehow doubt they have BK laws that will allow them to walk away from crushing debt loads.
The question is whether the courts will enforce any judgements against them. It is a heck of a risk on Citibank’s part.
Exactly. Let Citi try enforcing their contract.
If they are sufficiently paying off the oligarchs, I’m sure they will have no problem enforcing their contracts.
Exactly!
Not if they are loaning other peoples money and skimming off the top.
That is a good point. I worked on securitizations of credit card receivables back in the 90’s. They might be issuing the cards and selling the debt to investment banks to be turned into bonds. Citi would probably retain the servicing contract. Could be more expensive than anticipated. They would have to be careful with the terms of the contract.
you mean carefull like they were in loan documentation here in the US???
They will pedal this stuff to retirement funds and grandma and grandpa. The CEO will pocket big money and will be gone probably to a position as treasury secretary so he can cash out tax free, when the sht hits the fan.
Taxpayers will bail them out if they can’t.
update-flipper wins again,
last week i put an offer in on a home 5703 ventura cyn ca 91401. the owner accepted the offer from the flipper,it was identical as mine only difference he had no loan contingency 10 day close, i had the standard 17 day loan contingency.This flipper has been doing this in this zip, with a profit margin of 10-30k per flip after putting 60k into each proprety.i am mad,but i understand the flippers motivation,he cant get any interest in the bank,and were all scared of the stock mkt.this is a sure thing and he makes 8- 10 percent on his money
Is that plywood on one of the windows? It might well need $60K, plus the services of the Brush-Clearer in Chief.
Most interesting is that the home was “snapped up” within a week, probably near the $425K price tag.
This doesn’t have the look of a housing bust…
It’s odd. In my bellwether zipcode, inventory is as low as it was during the height of the bubble back in late 2005. Very little selection, other than in bad areas. Curious to see how this plays out. I’ll get my ducks in a row to buy, but I’m not going to make any stupid decisions based on artificial scarcity and government propaganda.
Neuromance
Same here in my area of So Ca (East Ventura County). Few standard sale pick’ins, and overpriced for marginal neighborhoods.
Yesterday we looked at two homes. One was a traffic noise, nicely done inhertied home. The new blue/while/brn tile roof was fugly. Tile on all the floors and counters.
The other one, was nice but not our taste, and the damn German Shepard next door is a barker. I suggested to the seller one of the ultrasonic dog gizmos ($10) at Radio Shack by their property line.I know, the dog will just move far enough not to hear it and still bark. $420K is f@@king insanity for a 1960’s rancher with a small pool. And what’s with all those 1/2 boulders on the house 1/2 up and grey paint. Fugly.
That house was a brick with shutters on the side of the window house, not a McCrapsion.
The other one, was nice but not our taste, and the damn German Shepard next door is a barker. I suggested to the seller one of the ultrasonic dog gizmos ($10) at Radio Shack by their property line.
You might also be disappointed to learn that the barking won’t stop once you (or someone else) moves in. That’s because there are some dog owners who feel that absolutely everyone on the planet needs to listen to their dog, and that there is nothing that is more important than incessant barking.
If you’ve been bedeviled with barking, also be aware that the issue won’t go away easily. But, ever so quietly, more and more of us peace and quiet lovers are banding together and taking action against this sonic sewage that’s pumped into our houses without our consent. Here is one of our favorite places — BarkingDogs.net.
Thank you, Slim. I appreciate that link.
What’s great about checking out the neighborhoods (solo, without realturds involved) is that you get a taste of everyday life in the neighborhood.
Thank you, Slim. I appreciate that link.
You’re welcome!
But do keep in mind that, even if you use “no nearby barking dogs” on your house-hunting checklist, there’s nothing stopping the neighbors from acquiring robo-barkers after you move in. In fact, that happened right across the street from me.
There was a reason the mortgage lending standards which previously existed came into existence. Because they were the net result of a balancing of myriad real-world factors.
Along comes Lew Ranieri, the father of mortgage securitization, and creates a new market out of packaging and selling MBS. Tremendously lucrative. And the old rules went out the window. As the debt markets became hungrier for the paper containing promises to pay, the housing bubble was born. “Just give us the paper” meant they just needed to have a warm body promising to repay unrealistic sums of money in order for all the middlemen to collect their commissions.
Well, as we saw, it imploded. Now, end buyers don’t want to buy MBS. Only the government does for the most part. Which is just a subsidy for the financial sector, those who package and sell these mBS. And it’s a housing price support.
Watching the housing bubble has been an exercise in peeling back the layers of the onion. I look forward to seeing what happens after November 2012. The politicians may get washed out, but I wonder what will happen to the power brokers. Perhaps some of them may be washed away as well.
At any rate, it’ll reveal another layer of the onion.
Slim
Thank you for the tap on the shoulder.
I am somewhat disappointed the city in our target area, has no ordinance on dog barking. If I was in charge it would be:
$100 first ticket
$500 second ticket
$,1,000 third ticket and then if one more complaint, euthanasia (for the animal, and maybe even the owner). LOL
The right to quiet enjoyment after buying a home should be a law. It’s implied for us renters in multi-family units. Barking is more an annoying, it ruins your life experience.
I feel for you.
an s/b than annoying…oops
I am somewhat disappointed the city in our target area, has no ordinance on dog barking. If I was in charge it would be:
$100 first ticket
$500 second ticket
$,1,000 third ticket and then if one more complaint, euthanasia (for the animal, and maybe even the owner). LOL
Here’s a model ordinance, which I’ve heard has been implemented somewhere in South Carolina. I’m not sure where. (Paging palmetto, do you know?)
There seem to be some remote ultrasonic bark control devices on Amazon.
Gotta read the reviews though. The review graphs shaped like an upside down L are the best - mostly positive reviews. The ones shaped like C’s means a lot of good and a lot of bad reviews.
Slim- Thank you. Great find. I’m reading it now.
Neuromance- Thank you. Great thinking to look on Amazon.Great data point for numerous options.
UPDATE:
lim
That link is a favorite now. Thank you. Interesting.
Neuromance
Some of the experiences from the reviews of those anti-barking ultrasound devices were soooo funny,I laughed so hard I almost peed. The Dazer II and Super Doggie Blaster reviews were ROTFLMAO. Again, thank you.
Amazon is a pretty good site for reviews and such. Just gotta be careful of “gamed reviews” - a company posting a lot of positive reviews, that sort of thing. Otherwise, it’s a good complement to Consumer Reports IMHO.
“…If you’ve been bedeviled with barking, also be aware that the issue won’t go away easily.”
Au contraire, it goes away QUITE easily, though not necessarily legally. But note, it’s not the dog’s fault, it’s the owner’s.
Try:
-Asking the neighbor in person, nicely.
-Asking the neighbor in person, not-so nicely.
-Written notification of public nuisance to neighbor and city authority
-Enlisting the aid of equally-annoyed neighbors/petition to authorities
-Noise ordinance violations–call sheriff repeatedly
-Small claims court/Intrusion on peaceful enjoyment of your property
-Public shaming on YouTube/public fliers
-Yelling “Time to put your dog in, _name______” at the top of your lungs whenever the dog goes off.
-Pre-recorded profanity on noise-detector trigger/remote dog blaster
-Putting dog in a bag and taking it to the pound in another county
-Antifreeze doggie treats/Remington 12 gauge
-Moving to a place with a HOA that forbids pets
-”Mighty Plugs” earplugs and waiting them out. Either dog will die or neighbors will move.
My sincere sympathies. Don’t give up.
this is a sure thing and he makes 8- 10 percent on his money”
as long as he can sell it fast
Real Estate
January Prices Continue to Slide
Published: Feb. 6, 2012
Home prices are continuing their slide into the new year as January home prices fell to 2.6 percent below where they were a year ago, a decline from December, when prices were 2.1 percent below December 2010.
Data provider Clear Capital today reported that national home prices bucked three months of stability and posted a loss of 1.6 percent quarter-over-quarter, more than a full percentage point in lost value compared to last month’s decrease of 0.4 percent. On a year-over-year basis, the nation lost a more significant 2.6 percent, due in part to market seasonality and an increase of REO sales as a percentage of total home sales, from 24.8 percent at the end of 2011 to 25.4% at the end of January.
Regionally, the Midwest lost 4 percent quarter-over-quarter, leading the nation in quarterly losses for the first time in seven months. The Midwest saw the most significant change in overall performance of any region. These shorter term declines pulled down its year-over-year returns to -5.2 percent, a marked increase from the softer 3 percent loss reported last month. This drop in values can be partly attributed to a 1.5 percent uptick in REO saturation over the past quarter from 29.5 percent to 31 percent.
“Looking at the latest data through January, home prices remained relatively unchanged with the exception of the Midwest,” said Dr. Alex Villacorta, Director of Research and Analytics at Clear Capital. “Although prices at the national level continue to slide due to pressure from the Midwest, the lower priced segments of several specific markets are bucking the trend and seeing appreciation, suggesting that recoveries could be occurring from the bottom up.
“When we look at the strength in the bottom tier of prices, the volatility within the metro markets, the rapid changes in direction with certain regions, and relative stability in others, these factors underscore the economic and market fragility that remains a dark cloud over housing prices.”
The West, South and Northeast regions were relatively calm, with quarter-over-quarter declines of less than 1 percent.
The Northeast region remained essentially flat over last month’s report with a very mild quarterly loss of 0.7 percent, and year-over-year growth of 0.1 percent. This region has been resilient over time with relative stability in year-over-year and quarterly numbers, but also boasts overall losses of just 22.5 percent since the height of that market’s value in 2006, as compared to the national average of 40.5 percent in losses since the nation’s peak.
The Southern and Western regions posted similar and mild price changes quarter-over-quarter, with 0.9 percent losses each and price decreases of 1.8 percent and 3.5 percent respectively year-over-year.
After consistent weakness throughout 2011, the West reduced its year-over-year losses by nearly a full percent when compared to last month’s results of -4.4 percent. This change can be partly attributed to decrease in REO sales from 38 percent in the first quarter of 2011, to a healthier 31 percent today.
Micro-markets showed high degrees of variability and softening due in part to seasonality and local differences in REO saturation.
Quarter-over-quarter gains for the top performers are narrow and aligned with last month.
Birmingham-Hoover takes the lead on quarterly gains, with 4.3 percent growth, replicating its performance of last month.
Phoenix sits in a very respectable second place with quarterly gains of 3.2%, and advances to 4th place in year-over-year performance.
All of the top performing MSAs avoided quarterly losses this month; however a third of these markets posted mild quarter-over-quarter gains of less than 1%, and only three gained more than 2%. This month’s leaders are showing growth consistent with the past two months, topping out in the mid 4% range.
The Birmingham-Hoover MSA in Alabama took the lead this month with 4.3 percent growth quarter-over-quarter. This market is also showing marked improvement in its year-over-year performance, improving from losses of 11.1 percent year-over-year in last month’s report to just 2.2 percent this month. The drivers for this market’s strong performance include significant gains in its low tier segments (homes worth $63,000 and less), distressed asset sale prices, and a reduction in REO saturation to 32 percent from a high of 40 percent in 2011.
Phoenix is also on the move with 3.2 percent quarterly gains, and a 4.5 percent increase in prices year-over-year. Similar to Birmingham, the Phoenix market has shown signs of a recovery starting with the low tier segment (homes worth $82,000 and less), in price increases for distressed sales, and a deep reduction in REO saturation rate of over 15% since the start of 2011 to a still high, but more reasonable 32 percent. However, Phoenix has experienced severe declines since the market peak of over 61 percent and has a lot of ground to make up.
Double-digit price drops are back for this group, as losses have not been this severe since May of 2011. Detroit was hit with quarterly price drop of 15.5 percent and an increase in distressed sales. Dayton shows high volatility, and shifts from the best quarterly performer last month to a drop of 4.5 percenbt this month.
This month’s low performing MSAs showed clear weakness as compared to the same group last month, with all metros posting losses greater than 1.5 percent, and 60 percent with losses of more than 3 percent quarter-over-quarter. On a yearly basis, a full 13 of these 15 markets are showing losses greater than 3 percent, with an average REO saturation rate of 28.5 percent.
…
But just wait for that red-hot, post-Super Bowl spring selling season! Prices will start going through the roof!
“A depression is just a broad-based encounter with the debt-service wall by a significant fraction of the population.
It can happen to individuals without derailing the global economy. But when it happens to the masses, look out.”
This, as I see it, is the only stick we have to get the PTB that hold the money, to agree to reforms.
The Donald said, if you owe the bank $50K they own you but if you owe them $50M, you own them. Well, the collective “little people” owe the elite few a couple dozen trillions of dollars.
You either make it possible for us to repay that debt, or that debt will cascade default into depression and you will hold nothing but uncollectable debt. As long as the govt can keep selling $1.3T net new US treasuries at sub-inflation rates, that isn’t a real issue. They people holding all the legal tender can’t imagine it might really poof into thin air. As soon as we start to see pressure on US Treasuries (I think 4-5 more years, max), then I suspect the people with legal tender will be rushing past each other in hopes of exchanging their legal tender for anything other than legal tender.
People on the coasts can complain all they want about investors keeping real estate prices inflated. IMO, that is just the early birds getting out of legal tender.
I think there is a solution that does not involve crash into depression. Unfortunately, I seem stuck at square one trying to convince people there is another way out of this.
I am beginning to suspect that some people actually desire a global depression and loss in faith of legal tender.
It is very hard to convince someone of something when their income is dependent on not getting it.
People on the coasts can complain all they want about investors keeping real estate prices inflated. IMO, that is just the early birds getting out of legal tender.”
maybe
Who gets what?
http://www.cnbc.com/id/46284177
“So in theory a settlement will only cover about half of a third of mortgage borrowers, which is to say just big bank servicers and likely the loans they own”
“850,000 supposedly struggling borrowers get principal reduction, based on proposed $20K each in write downs using $17 billion in bank money. Then two million borrowers who have already lost their homes get $1500 each, based on the $3 billion of settlement money allocated for restitution.”
“The rest would go to some kind of reserve account for state and federal foreclosure relief programs.”
So, the $25B settlement is the banks
$17B they are giving themselves against likely future foreclosures on losses as principal write downs, likely requiring borrowers sign new mortgages so they won’t have to robo sign the previous mortgage in the future foreclosure.
$1500 for the people that have already lost houses to one these big 4 banks in return for giving up rights to make other claims, whether they were robo signed or not. Cheap way to buy yourself out of liability.
$5B slush fund to the sates.
http://www.cnbc.com/id/46205285
Nice article by a guy that runs a data storage business*.
His solution to our economic troubles are simple. Use government money to train people the skills he needs them to have, so he can pay them suck wages, not have to pay for the training himself, so he can reap huge profits.
Here is his solution:
“# Skills: We can provide specific skills training conducted in an intense boot camp style, followed by a period of apprenticeship. Unlike a traditional college or university, we can retrain and re-skill people in weeks or months on very specific jobs and expertise instead of 2 to 4 years of classroom theory. Plus we eliminate the subjects typically required by colleges and universities that have no relevancy to a specific job.”
So, I ask, why do you not do it? Hire people off the street, you pay for the training and apprenticeship, then pay them what it costs to keep them once you have them trained up. What the problem? Why do we need govt money for this?
I think he left off something… Ship everyone with an IQ under 130 out of the country, and let in anyone around the world with an IQ over 150.
Half of all people have a below median IQ. 99% have an IQ under 130.
An economy needs to provide jobs for those people too.
* Data storage business. Intelligent and skilled Linux/Unix administrators and data base administrators willing to work long hours, doing boring work, for minimum pay.
+1
Half of all people have a below median IQ
This is a real problem in the age of high tech employement. As I mentioned above, you see plenty of people at airports with their laptops and iToys. These people are for the most part “significantly above average” when it comes to intelligence.
Are we headed towards a “Brave New World” where people are divided into castes based on their IQs? I think we definitely are. Better hope your kids are Alphas or at least Betas.
Headed?
We’re there now.
I just wrote to him and he wrote me back right away saying he gets that the government can’t really train people for what he wants and that he has to do it. He says that the problem is that his company can only bring in and train people from the ground up here and there, and so everybody would have to do it or there would have to be some kind of program that trained people right to actually make a dent in the number of unemployed. So I’m not sure what he was trying to accomplish other than maybe to get other people to think about training people…?
We’re heading for a huge labor shortage in manufacturing. Even without any growth, after 30 years of not hiring, suddenly the entire workforce is heading for retirement.
So the companies are trying to convince young people to pursue careers as skilled factory workers. But here’s the problem. Young people noticed what happened to their older family members.
Perhaps the problem for those recruiting labor is that people are NOT stupid. They really can’t promise “work hard and get ahead” anymore and be believed, aside from select companies and portions of the economy.
Sounds like a good excuse to move more overseas.
Perhaps the problem for those recruiting labor is that people are NOT stupid.
I know a few young adults that work in technology, and they are bright and well informed. One doesn’t need to explain the demographic distribution to them.
we need to get the median IQ up to 120, minimum.
Yeah, if we could just test for it in vitro that would solve everything.
Bieaavu= Borrowed into existence, abstract, arbitrary value units?
Tbed = the mirror image of debt?
Lethvbpnitrdle = ledger entries that have value because people need it to repay their debt ledger entries?
AmuBieVbobd = Abstract monetary unit, Borrowed into existence, Valuable because it is offset by debt?
FRnSopdVbcbicbutrd = Federal Reserve notes, Symbolizing other peoples’ debts, Valuable because it is used to repay debts.
anti-debt?
Oh, I like anti-debt.
Anti-debt is borrowed into existence, has value because people can use it to destroy debt, and if people ever stop trying to repay their debt, the anti-debt loses all value.
It is impossible for one person to sell more than they buy, accumulating anti-debt, unless someone else is first borrowing that anti-debt into existence.
The people that are accumulating large amounts of anti-debt can do so, only because others are spending down their supply of anti-debt or are borrowing new anti-debt into existence?
Anti-debt enables trade imbalances. Over the long-term, trade imbalances lead to the a build up of debt on the party on the negative side of the trade imbalance. Interest paid by the party with debt to the party holding the anti-debt widens the trade imbalance. The party with the trade imbalance can’t repay their debts unless the trade imbalance reverses so that the people with debt can get the anti-debt they need to destroy their debt. If the people with debt can’t get anti-debt, then they will quit trying, default destroying both the debt and the anti-debt.
For hundreds of years, we attempted to get anti-debt and barter currency to coexist, but this led to a long period of economic turmoil where anti-debt fueled periods of boom, only to be destroy as people attempted to convert their anti-debt into barter currency.
Yeah, I think I like it.
Dollars, Euro, Yen, Yuan, etc, etc, etc,… ALL anti-debt.
Gold, cigarettes, piggyback rides, not anti-debt. A piece of paper or a ledger entry saying IOU a gold, IOU a cigarette, IOU a piggyback ride are all anti-debt.
Tbed = the mirror image of debt?
I’m partial to this…I think it could catch on.
Dollars, Euro, Yen, Yuan, etc, etc, etc,… ALL anti-debt.
I like it. Anti-debt is clear. Debt and anti-debt are created in identical properties. When you apply anti-debt to debt, both are destroyed.
Here’s where you lost me:
Gold, cigarettes, piggyback rides, not anti-debt. A piece of paper or a ledger entry saying IOU a gold, IOU a cigarette, IOU a piggyback ride are all anti-debt.
The IOUs are all debt—and in this case, they are debt that does NOT have matching anti-debt.
Mining gold does not create matching debt. Paying off a debt with gold destroys the debt, but does not destroy the gold.
created in identical properties
Should have read “created in identical quantities”.
Randy Travis Arrested for Public Intoxication
by Jeff Royer | February 6, 2012 at 2:22 PM | Music
Country superstar Randy Travis was arrested for public intoxication in Dallas this morning after being discovered by police drinking alcohol in front of a Baptist church.
According to TMZ, the Sanger Police Department dispatched officers to the church after witnesses reported a suspicious vehicle parked outside. Police reportedly arrived to discover the 52-year-old singer clutching an open bottle of wine with his speech slurred and the smell of alcohol on his breath.
———————————————————————————-
Randy Travis
I’m gonna love you Forever And Ever, Amen lyrics
You may think that I’m talkin’ foolish
I’ve been Robo signed can’t you see
You may wonder just how, I can promise you now
This house will be mine and I’ll get it for free
I don`t care if it’s renters I’m killin’
I’m no longer one of those guys
As sure as I live, no payments I`ll give
This house will be mine until the day that I die
Oh, baby! I’m gonna live here forever, forever and ever, Amen!
As long as old men sit n’ talk about the weather
As long as old women sit n’ talk about old men
If you wonder how long I’ll be squattin’
I’ll be happy to tell you again
I’m gonna live here forever and ever, forever and ever, Amen!
They say that time takes it’s toll on a body
Makes a young victim’s brown hair turn gray
But, honey, I don’t care, I ain’t in love with your hair
And if it all fell out, we`ll have a free house anyway
They say time can be hard on a memory
They say older folks minds will play tricks
Well, it’s easy to see, it’s happenin’ to me
I haven`t paid the mortgage, since 2006
Oh, darlin’! I’m gonna live here forever, forever and ever, Amen!
As long as old men sit n’ talk about the weather
As long as old women sit n’ talk about old men
If you wonder how long I’ll be squattin’
Well, just listen to how this song ends
I’m gonna live here forever and ever, forever and ever, Amen!
I’m gonna live here forever and ever, forever and ever
Forever and ever, forever and ever, Amen!
Country superstar Randy Travis was arrested for public intoxication in Dallas this morning after being discovered by police drinking alcohol in front of a Baptist church
I can top you, Randy.
Back in 1982, when I was almost finished bicycling around this very big country, I was less than a week away from my final destination, Ann Arbor, Michigan.
But the gales of northern Ohio had different ideas. I fought a fierce wind as I inched closer to the Michigan line.
On a Sunday afternoon out in the countryside, I finally had enough. So I jumped off the bike, flung it down to the ground, and cussed that wind out.
I was right across the road from a Catholic church.
Nov 23, 2009 … Randy Travis Forever and Ever Amen
http://www.youtube.com/watch?v=ptDBuNlbG0A - 131k -
“I guarantee you can’t buy a cheeseburger with a Euro in most restaurants in the US. That’s why it’s not money, or legal tender, if you prefer, which is ‘legal for all debts, public and private’.”
If you tried to pay for that cheeseburger with, say old US 3-cent pieces, the restaurant probably would accept them either, even though that are legal U.S. tender.”
If you tried to pay for that cheeseburger with, say old US 3-cent pieces, the restaurant probably would accept them either, even though that are legal U.S. tender.”
Perhaps, but only because they might not recognize them as money. Legally, if they are shown to be money, they have to accept them- all US coins and bills are legal tender. (And there is also some leeway for small businesses to not accept large bills or whatnot.) And you can deposit those coins at a bank, and they’ll be credited to your account, and you can pay fines or taxes with them. You can’t do that with Euros or gold bullion.
As far as I know, there is no law in the U.S. that would prevent businesses from accepting euros in payment. Most businesses chose not to, because of the hassles involved, such as knowing the current exchange rate, going to the bank to exchange euros for dollars, etc.
Am I right about this?
What’s the difference between paying your bills with euros and paying your bills with chickens?
A business can accept anything as payment, but it only has to accept dollars- because only dollars are legal tender.
that are = they are
Papademos Meets Creditors as ‘Sacrifice’ Looms
Bloomberg
By Maria Petrakis, Marcus Bensasson and Natalie Weeks - Feb 6, 2012 6:15 PM ET
“The salvation of the country, remaining in the euro, means great sacrifices,” Venizelos told reporters in Athens late yesterday after meeting with the so-called troika of representatives. “Failure of these talks, failure of the plan, the country’s bankruptcy, means even greater sacrifice.”
http://www.bloomberg.com/news/2012-02-06/papademos-meets-creditors-as-sacrifice-looms-for-greece-to-stay-in-euro.html
Uh oh, Gisele is not a team player.
If only I could have talked to her I could have told her what to say, like…
Eli rules my [expletive]. Eli doesn`t own my [expletive] husband, it`s not my Tommy`s fault the recievers have [expletive] stone hands.
Or….
Somebody should tell the [expletive] PatrIots defensive backs it`s not aginst the [expletive] rules to cover somebody in the [expletive] fourth quarter.
Gisele rips Patriots receivers for husband Brady’s Super Bowl loss
Last Updated: 5:42 PM, February 6, 2012
Posted: 10:20 AM, February 6, 2012
INDIANAPOLIS — Gisele Bundchen ripped into the Patriots receivers for the failed plays she believes cost her quarterback husband Tom Brady a fourth Super Bowl ring.
The Brazilian supermodel was caught on camera lambasting No. 12’s teammates after Sunday’s game in Indianapolis as she angrily defended taunts against her husband by Giants fans.
Fans can be heard yelling “Eli rules!” and “Eli owns your husband” as she made her way through Lucas Oil Stadium following the Patriots’ 21-17 defeat, the second time Giants quarterback Eli Manning has bettered three-time winner Brady on the Super Bowl stage.
The comments riled Bundchen, judging by video obtained by online gossip site “The Insider,” with the model making it quite clear to those around her who she thought was to blame for Brady’s failure to land the win.
“You [need] to catch the ball when you’re supposed to catch the ball,” she is heard saying. “My husband cannot [expletive] throw the ball and catch the ball at the same time. I can’t believe they dropped the ball so many times.”
Although Bundchen mentioned no names, she almost certainly was referring to wide receiver Wes Welker, who was judged to have made the costliest fourth-quarter drop, along with a missed catch by tight end Aaron Hernandez.
http://www.nypost.com/p/sports/giants/gisele_rips_patriots_receivers_for_CM5OIxlceDT0rkFNAHcG9O
California may join multi-state mortgage settlement
California has until Monday to share in a multi-state deal with banks to obtain mortgage relief and reforms. Atty. Gen. Kamala Harris, who walked away from talks last year, says the door remains open.
By Alejandro Lazo, Los Angeles Times
February 6, 2012, 11:03 a.m.
With a Monday deadline at hand, California officials have resumed direct talks with the Obama administration about joining a multibillion-dollar, multi-state mortgage settlement with the nation’s largest banks, a source said Sunday.
The potential settlement would call for banks to provide financial assistance for homeowners who experienced foreclosure or are in danger of losing their homes. It also would require banks to overhaul their mortgage servicing and foreclosure practices as well as include a component for “principal write-downs,” the reduction of mortgage debt for individual homeowners.
Gaining California’s support for the deal would be a significant accomplishment for the administration, which in recent weeks has been trying to step up its aid for the beleaguered U.S. housing market. Monday is the deadline for individual states to either reject or accept a deal; that deadline was originally Friday and was pushed back to allow more time for the high-level negotiations.
The administration has been pushing hard for a settlement among state attorneys general, the nation’s five largest mortgage servicers — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. — and certain federal agencies. But several attorneys general have expressed skepticism over the deal.
California Atty. Gen. Kamala D. Harris walked away from negotiations last year, saying the banks were asking for too much, including release from future potential legal action by the state.
As recently as two weeks ago, she called the potential $25-billion settlement inadequate for California.
But in a statement Sunday night, Harris said the door remained open for California to join.
“For the past 13 months we have been working for a resolution that brings real relief to the hardest-hit homeowners, is transparent about who benefits and will ensure accountability,” Harris said. “We are closer now than we’ve been before, but we’re not there yet.”
…
Why the AGs Must Not Settle: Robo-signing Is Just the Tip of the Iceberg
by Ellen Hodgson Brown / February 6th, 2012
A foreclosure settlement between five major banks guilty of “robo-signing” and the attorneys general of the 50 states is pending for Monday, February 6th, but it is still not clear if all the AGs will sign. California was to get over half of the $25 billion in settlement money, and California AG Kamala Harris has withstood pressure to settle.
That is good. She and the other AGs should not sign until a thorough investigation has been conducted. The evidence to date suggests that “robo-signing” was not a mere technical default or sloppy business practice but was part and parcel of a much larger fraud, the fraud that brought down the whole economy in 2008. It is not just distressed homeowners but the entire economy that has paid the price, resulting in massive unemployment and a shrunken tax base, throwing state and local governments into insolvency and forcing austerity measures and cutbacks in government services across the nation.
The details of the robo-signing scam were spelled out in my last article, here. The robo-signing fraud and its implications are expanded on below.
…