Weekend Topic Suggestions
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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More on DryShips (DRYS)
(This info is from last year but I believe it gives flavor to just what sort of company DRYS is):
http://divingthriller.blogspot.com/2011/12/smoke-and-mirrors.html
In addition: There was some sort of an SEC filing signed by this Ziad Nakhleh guy involving 97,301,755 shares of DRYS. (The purpose and meaning of the filing is beyond my understanding.) This filing was signed Feburary 14, 2012, the day DRYS sold at a high with enormous volume (a classic Pump and Dump operation from what I can see).
Interesting stuff.
Sorry, I meant to post this in the bits bucket.
OMG! It just goes on and on! Take a look at this one day chart for DRYS:
http://finance.yahoo.com/q/bc?s=DRYS&t=1d&l=on&z=l&q=b&c=
Somebody has set up shop at the $3.70 - $3.72 price level and is endlessly - as in all day long - selling stock to thousands of Sheeple.
Suck ‘em in, then shake ‘em out.
“Americans are the dumbest investors around.”
- George Economou, CEO of DryShips
DRYS is scheduled to release an earnings announcement February 22.
Oh the pain!
Suck ‘em in, shake ‘em out.
It is obvious that Obama’s Presidential campaign is going to have a “fair share” theme this year.
So I ask, what is my fair share?
Is it 25% for federal taxes? 35%? 40? 50 or more?
Should there be no cap on what I pay into FICA?
Should I be means tested for Social Security when I hit retirement age and not get what I paid in because I saved all of my hard earned money versus somebody who wasted all of their money on McCrapShacks and Hummer’s and $40k birthday parties for their little princesses?
Is that fair?
I was a working class kid who didn’t have a pot to piss in who worked his nuts off his entire life to be successful.
Is it fair for me to pay the same tax rate than a trust fund baby who went to Harvard or Yale cause his daddy and granddaddy both went there and he was just hired into the family business after 5 years of partying?
Is that fair?
And who decides what my fair share is?
Those dickwads in Congress who would steal every last penny from all of us just to get re-elected?
Maybe a fair share czar?!
I don’t know what the right answer is or that there is a right answer…..
Humans have compassion so we like to frame things as fair. In severe cases of ‘compassion’ + ‘hormones’ we can even fall in love. A trait not shared with other species. Do any of the Republicans strike you as compassionate? When the chips are down who will let compassion influence their decisions? Obama or any of the GOP hopefuls?
I think Ron would stick to his libertarian roots, the others not so much.
Isn’t the sweater guy playing the “compassion” angle?
Yes he is! Mostly for white Christians though. That leaves out 80% of the worlds population.
He and those who support him are no more Christians than I am a belly dancer.
In severe cases of ‘compassion’ + ‘hormones’ we can even fall in love. A trait not shared with other species.
Why do you think other species pair-bond in some cases, experience obvious signs of grieving at the death of one half of a pair, go into obvious danger for the other half of a pair, etc?
My thoughts exactly.
Next they’ll be saying we’re the only species that uses tools, can think abstractly, can recognize its own reflection in a mirror…..
“can recognize its own reflection in a mirror”
I had a cat who did that.
I believe any argument based on “fair” is moronic from the start.
All arguments should be based on pragmatic outcomes.
Is life better now that we’re $38T in debt, high unemployment, wages haven’t kept up with inflation, dependent on unsustainable debt growth, but at least we can have cheap, imported consume goods. Or, were things better when we had higher priced imports, but better paying jobs and a sound long-term economic manufacturing base?
Was life better when the rich were encourage to spend and invest their money, or are times better now that our tax code actively encourages the rich to do nothing with their money other than loan it out to people that can’t pay it back?
Fair = moronic argument.
Results = sound argument.
Oh, BobbyMac, sweetie. I feel your pain, but now you must tattoo this on your brain and take it into your heart. When you figure out how to accept it, you’ll feel a lot better, I promise you.
Ready? Here it comes…
LIFE IS NOT FAIR
PS.
Darrell, in case you were not being ironic:
Have you ever watched a dog dreaming?
Seen a raven dropping stones into a jar to raise the water level?
Watched a kittycat puff up at its reflection in a mirror?
I have.
The Ghost Towns of Spain (aftermath of collapse of the real estate bubble).
http://www.telegraph.co.uk/news/worldnews/europe/spain/9087498/The-ghost-towns-of-Spain-Images-that-are-desolate-symbols-of-collapsed-property-market.html
Once dubbed the “Manhattan of La Mancha” the new development was supposed to include 13,000 apartments to create a satellite town and suburban paradise for 30,000 people.
But just five years after work began only 5,100 of the properties are completed, less than a fifth occupied and construction on the promised infrasture, including schools and sport centres, have long been abandoned.
Such modern-day ghost towns are rapidly becoming a familiar part of the Spanish landscape an estimated one million new properties left unsold and the number of foreclosure proceedings rocketing.
Earlier this month Spain’s newly-elected conservative government of Mariano Rajoy ordered the nation’s banks to set aside funds to cover toxic real estate assets valued at 175 billion euros.
Over 500,000 foreclosures were granted by courts in Spain in the three years leading up to September 2011, newly released data shows.
Could probably expand the topic into ghost property developments around the world.
China’s Ghost Cities
Ever wonder how China, a second world nation, can afford to build entire vacant cities while the US can’t even maintain it’s existing infrastructure?
This would have to be China deploying it’s vast trade surplus - whatever they are not using to buy US treasury bonds I guess.
————————————————————————
Start with a basic inventory of housing to measure recession’s impact
By Rosland Gammon on Feb 06, 2012 in Best Practices, Economy, Featured, Real estate | Econ development, Rosland Gammon
Vacant subdivisions
Day 1 of Britt Johnsen and Kirsti Marohn’s project was ‘So many lots, so few houses.’
Britt Johnsen and Kirsti Marohn produced a great three-part series called “Gambling on Growth” for the St. Cloud Times using empty lots to show the recession’s impact on new housing developments. The series won a Sigma Delta Chi Award for excellence in journalism from the Society of Professional Journalists last year.
Through their reporting, they found their three-county area had 12,000 empty lots.
Those lots left some homeowners in stark areas watching their home values fall.
In part one of the series, they write that homeowners weren’t the only victims:
etc
Ever wonder how copy editors ever got the job when they don’t know the difference between “it’s” and “its”?
There, their, they’re… show some compassion.
Funny money? CNBC is reporting that authorities have seized 6 Trillion dollars of counterfeit US Treasuries in Europe. This begs the question about the safety of digital and paper money as a store of value. I mean this is not the first time as I remember a few Billion of fake US bonds were discovered a few years ago. Don’t forget that N. Korea is the world’s best counterfeiter in US currency. What’s really in those bank vaults anyway?
http://worldradio.ch/wrs/news/wrsnews/italy-tracks-counterfeit-bonds-to-zurich.shtml?29168
Has the BDI lost its value as an economic indicator, or do such assertions merely reflect the tendency of MSM economics commentators to say stupid things?
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
February 13, 2012, 3:00 PM
In Defense of the Baltic Dry Index
By Simon Constable
News that the Baltic Dry Index is sunk as an economic indicator is much exaggerated.
The index — which measures the cost to haul dry freight over the world’s oceans — has merely run aground after getting hit with a shipping-market tsunami. Don’t worry. It will right itself soon enough — and should once again become a useful forecasting tool, as early as the end of the year.
The cost of shipping dry commodities, such as coal, iron ore and grains, forms the basis for the BDI. When more raw materials are shipped, it is because they are needed to be made into finished products. Also, when more of them are shipped, the price of chartering a vessel increases. That makes the index a gauge of industrial expansion.
It worked beautifully until the financial crisis. Then things went wrong.
Since November 2009, the BDI has plunged 85%, from a high of 4661 to 715 Friday. Normally, such a move would augur a global slump. But this time, the slide coincided with the recovery, albeit a slow one, from the 2008-2009 global recession. That mismatch has some people willing to forever scuttle the idea of the BDI as an economic indicator.
The truth is those problems are only temporary.
…
It may be a study in malinvestment. The housing bubble spilled over into many other areas of investment. Shipping is just one, and now the pile on investors have launched too many ships. How long does it take to build a cargo ship ARO? I would guess (2012-2008) = 4 years minimum. Suadi Arabia is building the largest petrochemical facility in history. When that comes on line there will be gross overcapacity worldwide. It will take a few years. Solar cells: I read today that France has been been paying home producers of electricity 10x the going rate for electricity. Farmers building empty barns just to put arrays on, no cows. It’s bankrupting their electric company. Would steel prices have gone so high without all the building and ghost cities and ships we don’t need? Will we be living off the recycling like the Japanese did after WWII?
It’s four years (or more?) after the RE bust in the US and the price of most things is still going up, some things starting to turn. Like always, I am wondering what the trajectory of this thing is. It is already much much longer than I imagined.
I thought that interest rate manipulation (aka price fixing) was a standard practice at Megabank, Inc (including the private Federal Reserve Bank), but I now stand corrected.
BUSINESS
MARCH 16, 2011
Banks Probed in Libor Manipulation Case
By CARRICK MOLLENKAMP And DAVID ENRICH
The London interbank offered rate, set daily in London, is one of the world’s most important benchmarks. Now, U.S. investigators are probing whether U.S. and European banks manipulated it.
Multiple U.S. and European banks, which provide borrowing costs to calculate Libor every day, have been contacted by investigators, including the Department of Justice, Securities and Exchange Commission, and the Commodity Futures Trading Commission, according to people familiar with the situation.
Libor, which is used to set interest rates on everything from corporate debt to car loans, is supposed to reflect the rates that banks charge one another for loans. The banks report the rates they are charged, but during the financial crisis, evidence emerged that banks were understating those rates, possibly because they didn’t want to reveal that they were being viewed as highly risky and being charged high rates. While it is not clear how the investigations will play out, one result could be a change in the way Libor is calculated.
The probes come after questions increased in recent years about whether banks properly reported the rates they paid for the short-term loans, which serve as a key piece of the globe’s financial system. Libor is set in 10 different currencies, in maturities ranging from overnight to 12 months.
The probe began about a year ago with informal inquiries and has subsequently narrowed in focus though it is not clear what the parameters are in the current stage, these people said.
…
More
Bankers Cast Doubt on Key Rate 4/16/08
Study Casts Doubt on Key Rate 5/29/08
Unlike Goldman Sachs colony Greece, the people of Iceland told the banksters to go to hell, threw out their corrupt politicians, and even sent some bankers to prison. Despite all the dire predictions from the corporate-owned financial press, Iceland is now on the rebound:
ICELAND RATINGS RAISED TO INVESTMENT GRADE BY FITCH
FITCH UPGRADES ICELAND TO ‘BBB-’; STABLE OUTLOOK
FITCH DOES NOT EXPECT ICELAND TO SLIP BACK INTO RECESSION
FITCH SAYS ICELAND GOVERNMENT DEBT PEAKED AT 100% OF GDP IN ‘11
Darrell in Phx — Care to comment on why Iceland did not go all the way to Hell, despite their rejection of the standard bankster remedies to an economic crisis?
Wasn’t the debt at issue largely external - owned by people outside Iceland? I think the UK was the largest holder. And the owners of that debt were paid off, but by the UK government. Then the UK government asked Iceland to pay them back. Where upon Iceland said that the UK’s decision to bail out its citizens who lost money on Icelandic bonds was not Iceland’s problem.
I don’t know what would have happened without the bank bailouts, but I sincerely doubt that it would have closely parallelled what happened in Iceland.
I would add, greedy and foolish UK “investors” attracted by high yields on bonds floated by Icelandic banks got stiffed when those banks went under due to their own folly. The then-banker owned government of Iceland tried to put their population on the hook for their bankers’ bad debts, just as Bush, Obama, and their “former” Goldman Sachs economic team succeeded in doing to US taxpayers. However, the Icelandic people, not being sheep like the 98% of the US electorate who voted for Obama and McCain, told the banks to go to hell and refused, in a referendum, to be forced to cover debts incurred by banks and “investors.” They subsequently held both their bankers and their political prostitutes accountable for the mess they got the country in - again, a stark difference between citizens acting in the national interest (Iceland) and sheep (US voters).
There, fixed it for ya.
1) As Polly pointed out, most of the debt was owed externally.
2) With an entire population of 300K, Iceland has a population 1/100th that of the USA. The global financial impact of them defaulting on $70B foreign owned debt can not be compared to the impact the USA would have were it to default on $10s of trillions of debt.
3) People took massive haircuts when the government didn’t pay 100% on the deposit insurance when it took over the banks. IMF and ECB were able to inject $10+B to make up the difference to stop the spread of the crisis. They could not inject $10s of trillion to stop the spread of USA default/ failure to pay FDIC insurance.
4) There was a 90% drop in their stock market, WILD currency swings (20-25% annualized inflation rate for several months), and a massive recession.
Back when restaurants first moved from lard to vegetable oil, million of gallons of vegetable oil a year was being thrown away. People started using some of that oil to power vehicles….
But, it was not scalable because we’d need hundreds of billion of gallons of vegetable oil to replace out use of gasoline.
You are basically arguing the same as arguing that using used cooking oil could replace gasoline. What works on 1% scale does not necessarily scale up to a 100% solution.
Finally, none of my suggestions for getting out of our current problem fit the “standard banker remedies”. I’ve not heard bankers calling for a tariff on money leaving the country to end free trade. I’ve not heard bankers calling for a steep income tax with a 90%+ top marginal rate, ending payroll taxes, treating capital gains as regular income, etc. I’ve not heard bankers proposing we allow much of the existing debt default, but only after we’re done the 2 things above.
Just because I would rather avoid a total cascade debt default into depression if that is possible, does not mean my remedies are the standard banker remedies.
Just because I live in the 21st century rather than the 19th century, does not mean my ideas are standard banker ideas.
It is not a dichotomy.
4) There was a 90% drop in their stock market, WILD currency swings (20-25% annualized inflation rate for several months), and a massive recession.
Sounds a lot like what I was expecting here in 2008.
Except we got a 50% stock market drop and deflation.
Actually you mean 1/1000 not 1/100. 300K people wouldn’t even fill the Raleigh city limits. That’s the real reason nobody cared about Iceland. There are just not enough of them.
Native Icelanders are largely a survivalist society; banks and borrowing are not a significant factor for people who live isolated from “the real world” and in a communally-dependant culture.
Telling foreign money to go eff itself–and try to collect (what, their geothermal energy? Their fish?)– was probably a lot easier for them than it would be for those of us who are indebted financially to outside interests. It was only the folks in Reykjavik who catered to tourists, bankers, NORAD, who cared one way or another about defaulting.
ICELAND RATINGS RAISED TO INVESTMENT GRADE BY FITCH
Awesome news. Love it. I predicted on the day that they first gave the banksters the finger that they would be one of the first to experience a real recovery.
Of course, we had a nice “fake” recovery first… But I think given time, the differences will be clear.
Our fake “recovery” has been predicated on massive “stimulus spending” using trillions in borrowed and printed money. The statistical fakery by which indicators like “consumer confidence” are bouyed” and the long-term unemployed who exhaust their benefits and then go uncounted permits the illusion of an economic upturn, when the underlying fundamental picture is deteroriating faster and further.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100015053/icelands-viking-victory/
Iceland’s Viking Victory, or how to maintain your national sovereignty and social cohesion without kow-towing to imposed supra-national “solutions.”
Are stock traders deluding themselves by betting on QE3, or is the Fed trying to sucker punch the sheeple by first pretending they won’t go there, then doing an about face later this year on the first sign of economic weakness?
Hard to say…But one thing is for certain: The Fed’s Wall Street cargo cult is stronger than ever these days.
February 15, 2012, 12:10 PM
QE3? Don’t Bank On It
By Steven Russolillo
“Risk on” is all the rage on Wall Street these days.
The economy is improving, which is good for stocks. And if the recovery hits a pot hole, the Fed will hit the accelerator on its already-accommodative policy, which is also good for stocks.
Add it up and the S&P 500 is up more than 7% throughout the first six-and-a-half weeks of 2012. Not too shabby.
Corporate earnings (excluding Apple) have been mediocre at best, suggesting the “broader picture is not so strong,” says Kenneth Polcari, managing director at ICAP Corporates. “But this just re-iterates that weakness will give Uncle Benny the green light to initiate QE3…and boom! Risk On!”
Time to party like it’s 1999, right?
Not so fast, according to Dallas Fed President Richard Fisher.
In a speech earlier today, Fisher described the potential for third round of Fed stimulus as a “Wall Street fantasy.” He thinks there’s almost a zero-percent chance of QE3 taking place.
“In my view, it’s not going to happen,” he said. “It’s a fantasy. Wall Street keeps dangling QE3 out there [but] I just don’t see it happening.”
Uh oh.
He described the political backlash that followed QE2. It would be tough to gain enough support in Washington to implement a third round of quantitative easing, especially when the economy has shown signs of progress in recent weeks.
…
Are stock traders deluding themselves by betting on QE3
Seems pretty clear to me that it will happen.
I think they’re just waiting for some sufficiently-bad economic news to justify announcing it.
Fisher has talked tough before, then cravenly caved and went along with the rest of the Fed on “stimulus.” As far as the “political backlash” the most relevant point to remember is that by casting votes for pro-bailout Obama and McCain, 95% of the electorate signaled their willingess to bend over on demand for Wall Street. Don’t think Wall Street hasn’t noticed. The looting, greed, speculative recklessness, and debasement of the currency will continue unchecked.
Is a Greek bailout in the bag, and if so (or not), how will the U.S. economy be impacted?
I personally am very skeptical over how locking up an entire society in the metaphorical equivalent of debtor’s prison (aka austerity) can increase the chances they will ever make good on repaying their debt. Wouldn’t it be smarter for the Germans to figure out a scheme to encourage the Greeks to repay them, rather than merely punishing them for not being German enough?
Feb. 17, 2012, 5:50 a.m. EST
Greece seen closer to bailout on ECB move
ECB said to swap bonds, Germany backs off calls for delay
By William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — A Greek bond swap reportedly being conducted by the European Central Bank has boosted prospects for a deal early next week to approve a second bailout for the debt-strapped country, economists said Friday.
The move comes as Germany appeared to abandon its effort to delay the release of the bulk of the 130 billion euro ($169 billion) bailout until after Greek elections expected to take place in April.
“None of this solves the fundamental issues of an imploding Greek economy and an unsustainable debt path. And the deal could still unravel over the weekend. But at 7 a.m. [London local time] on Friday, mini-euphoria that a deal will probably be struck and the Greek crisis put off for a few more months is leaving markets in a warm cuddly haze,” said Kit Juckes, head of foreign exchange at Societe Generale.
…
Wouldn’t it be smarter for the Germans to figure out a scheme to encourage the Greeks to repay them, rather than merely punishing them for not being German enough?
It would be smarter to get paid in hard currency, such as ownership of the Greek coastline.
Obama, Timmay, Bernanke, and the “Second Great Depression” Savior Myth.
http://www.guardian.co.uk/commentisfree/cifamerica/2012/feb/16/second-great-depression-saviour-myth
As President Obama’s re-election campaign heats up, there are several new accounts of his track record finding their way into print. One item for which he is – undeservedly – given credit is saving the country from a second Great Depression. The political elites believe in the salvation from the second Great Depression myth with the same fervency as little kids believe in Santa Claus. And it has just as much grounding in reality.
While the Obama administration, working alongside Ben Bernanke at the Fed, deserves credit for preventing a financial meltdown, a second great depression was never in the cards. The first Great Depression was brought about not only from misguided policies at the onset of the financial crisis, but also from an inadequate policy response.
The spending associated with second world war ultimately got us out of the Depression. There is nothing magical about spending on war; spending of the same magnitude on road, schools, hospitals or anything else also would have lifted the economy out of the depression at any point after the initial collapse in 1929-30.
The problem was the lack of the political will to spend in these areas, whereas there was plenty of political support for fighting the war after the attack at Pearl Harbor. The lesson from this period is that the United States could have gotten out of the Great Depression any time it was prepared to spend the money to do so. This means that a financial meltdown could not possibly have condemned us to a decade of double-digit unemployment, since that would require a decade of ongoing policy failures after the original collapse.
All this should be obvious to anyone familiar with the history of the Depression. But we don’t have to go back 70 years for lessons on recovering from financial crises; we just have to look to the south. In December of 2001, Argentina broke the link between its currency and the dollar, and defaulted on its debt. The result was a financial meltdown that was certainly at least as severe as the worst-case scenarios that the United States might have faced in the dire days following the collapse of Lehman Brothers.
The second great depression was not only a possibility, it remains the probability. It has been delayed while the USA federal government keeps the global economy inflated with $1.3T a year deficits, increasing out real national debt (publicly held, not the factious trust funds) from $5T to $10T in 4 years.
Let’s give it 4 more years for that real national debt to break 100% of GDP, then a few more to hit 125%…. then let’s talk about whether the second great depression has really been averted, or just delayed.
I’m in the “delayed, and made much worse when the financial reckoning day eventually arrives” camp.
If we do not completely reverse course and start doing the exact opposite of almost everything we’ve been doing the last 60 years… then I agree.
Which, since I see little to no hope that we’re about to reverse course, I’d say you’re 99.999999% likely correct.
The spending associated with second world war ultimately got us out of the Depression. There is nothing magical about spending on war; spending of the same magnitude on road, schools, hospitals or anything else also would have lifted the economy out of the depression at any point after the initial collapse in 1929-30.
The problem was the lack of the political will to spend in these areas, whereas there was plenty of political support for fighting the war after the attack at Pearl Harbor. The lesson from this period is that the United States could have gotten out of the Great Depression any time it was prepared to spend the money to do so.
Exactly what I’ve been saying all along. Keynesian stimulus pulled us out of the last great depression, and it will eventually be used to pull us out of this depression.
The sad thing is some will accept Keynesian spending in no other form than war. It’s a lot more pleasant to spend it on infrastructure, universal health care, better education, etc.
But the ‘moralists’ will have it no other way. Unless the stimulus money is used to kill the enemy, they consider it a waste that encourages deadbeatism.
“…Pearl Harbor. The lesson from this period is that the United States could have gotten out of the Great Depression any time it was prepared to spend the money to do so.
Exactly what I’ve been saying all along.”
I couldn’t disagree more! Borrowing for bombs does not make for a sustainable prosperity. We were not recovered at the end of WWII, it took another decade. We could for the next decades sell stuff to the rest of the world because their factories were bombed out and we had certain other advantages as victors. That is not a logical foundation for borrow and spend economic theory.
What the borrowing did was to leave us in debt. The surge in activity encouraged us to continue to borrow and here we are. Keynes on Coke.
But the ‘moralists’ will have it no other way.
How about how Realtors are Liars?
They’re out there advising the public to buy housing while prices are falling, attempting to create a sense of urgency by suggesting sales increasing rapidly when in fact they’re at 14 year lows and flat.
These people just lie and lie and lie yet whenever their corrupt behavior is mentioned, the issue is redirected onto “banksters”.
Why is that?
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