Bits Bucket for March 10, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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I submit that this article comments on the tip of the iceberg, which is the homes currently facing foreclosure, while missing the underwater part, which not only includes many more homes in current payment status which are severely underwater plus the looming demographic tsunami of soon-to-retire baby boomers who will want to downsize from their family-sized McMansion tract develop homes.
I realize that overlooking such factors plays well into the recovery mantra.
Builders May Escape Inventory Shadow: Chart of the Day
By David Wilson - Mar 6, 2012 9:01 PM PT
A decline in the number of U.S. homes that may have to be sold is “undeniably providing support for a nascent recovery” in housing, according to Robert C. Wetenhall Jr., an analyst at RBC Capital Markets LLC.
The CHART OF THE DAY displays the total number of homes that have entered foreclosure proceedings or have mortgages at least 30 days overdue, according to quarterly data compiled by the Mortgage Bankers Association.
March 6 (Bloomberg) — Michelle Meyer, senior U.S. economist at Bank of America Merrill Lynch, talks about the outlook for the U.S. housing market and economy. Meyer speaks with Tom Keene on Bloomberg Television’s “Surveillance Midday.” (Source: Bloomberg)
In last year’s fourth quarter, so-called shadow inventory amounted to 5.13 million. The figure was the lowest in three years and 18 percent below its peak, reached in the third quarter of 2009.
“The trend positions the housing market to benefit from tighter supply levels in the future,” Wetenhall wrote yesterday in a report that examined U.S. homebuilders’ outlook for their spring selling season.
…
Truth is not facts and figures. Truth is whatever we agree it to be.
If some people can ignore that most money has been nothing but other people’s debt for the last few hundred years, then I see no reason that others can not ignore that we built 4 million too many houses and it will take the better part of a decade to work opff that excess inventory… assuming we’re able to maintain the household formation rates of the last 50 years.
Running out of money seems to be the plight du juor.
Occupy Wall Street in New York running out of cash
Fri Mar 9, 2012 5:51pm EST
* Donations have slowed
* Group plans ‘American Spring’ protests
By Michelle Nichols
NEW YORK, March 9 (Reuters) - New York’s Occupy Wall Street group is warning it could run out of money by the end of the month, raising questions about the future of the movement that sparked nationwide protests against economic injustice last year.
Donations to the group have slowed six months after it set up camp in a park near Wall Street, igniting the Occupy movement across the United States.
A report by Occupy Wall Street’s accounting group for the week ended March 2 showed it had $44,828 in a general fund in addition to $90,000 set aside to bail protesters out of jail during planned “American Spring” protests.
The report said, “At our current rate of expenditure, we will be out of money in THREE WEEKS.”
…
Have they put themselves on salary?
Running out of money seems to be the plight du jour.
Paging combo … cue one Two THREE!
Cash rules! Those with cash rule over those who have none.
(There.)
+1,000,000,000
I love how you keep drumming an obvious point. It never seems to get through though.
SIGH.
I can’t decide whether I prefer RAL’s robo-signed repetitive reminders that Realtors are Liars, or the steady drumbeat of Combo’s “cash is king” message…they both bring a modicum of stability to a dangerously unstable world.
The fact that they both happen to be absolutely smack bang on target is merely an incidental fact to you?
Wow, just wow.
” they both bring a modicum of stability to a dangerously unstable world.”
Got a $15.00 Robert Service collections book in a “like new” condition @ the friend$ of the Library fer .50 cents
Flask of wine; check
Home baked bread & a new kinda cheese from New Zealand:
water: check
mint choc-coffee beans; check
Pines, Granite, spring buddings & dangerous critters & a dangerously unstable world looming ahead; check
over thee fence & up thee hills, … eyes go, (eyes wonders what’ll happen today’s?)
Iffin’ you don’t hear from me’s by Monday, let ‘em know eye’s started North … Yeah, that’s the ticket: “he’s Lost somewhere’s in NORTH America’s!”
(Least eye’ll have a full moon fer me laments!)
Kitty: Just.Stop. He was looking at a different aspect of the messages. Nuance may be hard for you, but some of us enjoy it.
Behave like a Guest and mind your manners.
Oh please…
“I can’t decide whether I prefer RAL’s robo-signed repetitive reminders that Realtors are Liars, or the steady drumbeat of Combo’s “cash is king” message…they both bring a modicum of stability to a dangerously unstable world.”
I’m partial to Darrell’s steady reminders of the nature of money (honestly).
Church Foreclosures Reach Record Highs
Banks are going after religious institutions they’ve previously been reluctant to foreclose on.
By Abby Ohlheiser | Posted Friday, March 9, 2012, at 1:14 PM ET
Churches are being sold after loan defaults in record numbers, new data shows
Photo by Scott Olson/Getty Images.
Churches in the U.S. are shutting their doors in record numbers as the reckoning from the 2008 burst of the housing bubble catches up to religious institutions, Reuters reports.
According to data from the CoStar Group, 270 churches have been sold after a loan default since 2010, 90 percent of which were a result of foreclosure by a bank; 138 of those were in 2011, which is an annual record. Compare that with 2008, when there were only 24 church sales from default, and a “handful” more from the previous decade.
Like many property owners, churches across the country took advantage of the property boom. Church leaders took out additional loans for expansions or improvements on facilities, often to house growing congregations.
Now, those loans are defaulting, and churches are facing bankruptcy as donations dwindle and the value of their construction misses expectations. But apparently, banks have procrastinated on foreclosing on the institutions because they’ve “not wanted to look like they are being heavy handed with the churches,” Scott Rolfs, managing director of Religious and Education finance at Ziegler investment bank told Reuters.
…
well besides the usual reasons for not foreclosing…
“churches are facing bankruptcy as donations dwindle and the value of their construction misses expectations”
Huh? They are bankrupt because their construction has missed it value expectation? Were they planning on selling the church? Or were they expecting to do cash out refinances on the church building to pay for operating expenses forever? Churches planning to have maximum debt on their buildings forever? How does that attitude even start?
“Were they planning on selling the church?”
It’s called ‘collections.’ I play at a church which used to be full to the last seat every Sunday; a small donation from each family added up to lots of cash flow. Back in the day they paid me a good free-lance paycheck for showing up to play.
Post-housing crash, the same church is 75% empty on Sundays, and my payment, when it comes, is in the form of apple strudel.
Yeah, that is the OTHER part of the sentence. I get that churches collect money during services. It sounds completely absurd to me. Jewish law is that you don’t even carry money on the Sabbath so a synagogue certainly can’t pass a plate at services.
I was looking at the other half of the sentence. How does the “value of their construction missing expectations” play into it. Sounds like they were expecting to use cash out refis to cover part of their expenses.
I’ve heard that some synagogues sell tickets to attend special services such as Yom Kippur. They might not “pass a .plate” but they do colkect “fees” from their members.
It sounds completely absurd to me. Jewish law is that you don’t even carry money on the Sabbath so a synagogue certainly can’t pass a plate at services.
Uh … Christians aren’t Jews (See Acts 15) … they aren’t bound by Mosaic Law.
Christians do not worship on the Sabbath (last day of the week). They worship on the first day of the week.
They worship on the first day of the week.
This why our calendars start on Sunday. I prefer the European calendar view that starts on Monday with Sat and Sun at the end, read “week-E-N-D.”
I didn’t say you don’t have to pay. Jewish congregations are self-supporting, mostly though membership dues. There is no central hierarchy to provide funds. You just don’t pay during services. I assure you, for the very few services a year in which tickets are needed (and I’ve never seen anyone ever actually ask to see a ticket) you can’t walk in a buy it at the door. If you don’t have tickets as part of being a member of the congregation, you have to arrange it ahead of time. It is largely done because if they didn’t the number of people who showed up (for the 3 times a year when it is relevant) would exceed the fire safety capacities of the room.
Too many churches are all about “feeling good” or prosperity Christianity rather than stressing the sacrifices required (including financial) to be obedient to scriptural teachings. The chaff will blow away; the wheat will abide.
So collections are down. And these are the groups that the libertarians are saying will pick up the slack for the government social programs that they want to do away with.
I am surprised that attendance is down that much. I wouldn’t be terribly surprised if it were an area where population was dropping or if it were a “prosperity gospel” church. But in a mainstream church, I would expect attendance to increase in hard times.
We still have a “general welfare” clause in the Constitution. Society is judged by its response to the needs of its most vulnerable members. I will gladly and happily pay my taxes when local, state, and Federal governments are looking out for the welfare of those who would otherwise face destitution and suffering without any safety net. This does not relieve me, or you, of our duty before our Creator of doing what we can to alleviate the suffering and needs of others, to the degree that we can.
“But in a mainstream church, I would expect attendance to increase in hard times.”
You may then be surprised at the number of people turning their anger towards God for their financial failures.
The other day I saw a delapidated-looking individual, clearly crazy, walking down the street jabbering to himself and making bird-like noises. Ronnie Reagan, so beloved of doctrinaire conservatives, shut down many of the institutions that are so badly needed to take care of people like this. Maybe this guy did meth or maybe he just popped his cork at some point, but be that as it may, he was utterly incapable of looking out for himself. To treat him as societal garbage and force him to fend for himself is inhumane and an indictment on those of us that can and should look out for those who can’t look out for themselves. I’d rather pay my tax dollars to help out the vulnerable like this, in our own communities, than to pay for endless neo-con military misadventures or bailing out Wall Street plutocrats.
“I am surprised that attendance is down that much.”
Evangelical churches can be like that as they can be very “pastor centric”. The pastor is often the glue that holds the congregation together. If he falls out of favor if there is some kind of scandal the “faithful” will just move on to the next megachurch down the road. Hence the rise and popularity of “seeker friendly” churches that don’t challenge their members into spiritual growth and in many cases promise financial blessings to the members.
Nicely put, Sammy. Thank you.
There is a big church near me. They are in a converted six story office building with highway frontage.
They started building their new church next door to the buildling in about 2008. The new building is huge big, I mean, really something from the outside. I was speaking to a neighbor who goes there and apparently they had to stop construction on the inside work due to lack of funds.
“270 churches have been sold after a loan default since 2010″
That is not a very large number for the whole country.
Not at all. Most churches have to raise all the money needed for construction before ground breaking can begin.
That’s also how our little burg paid for the library expansion. Monies were set aside and saved for years and once there was enough saved they started the expansion.
February 28, 2012 12:32 PM
Foreclosure rates up on priciest homes
By Constantine von Hoffman
Last year saw a sharp drop in foreclosures for all but the most expensive homes. At the same time, lenders are taking much longer to repossess homes valued at $1 million or more than for less expensive properties.
There was a 28 percent drop in foreclosures and delinquencies in 2011, according to the Mortgage Bankers Association. However, since 2007 foreclosure rates on properties worth at least $1 million have risen by 115 percent, according to RealtyTrac. As the value of the property increases, so does the foreclosure rate. Since 2007, the share foreclosures for homes valued at more than $2 million shot up 273 percent. Over the same time, foreclosures on mid-range properties valued between $500,000 and $1 million fell by 21 percent.
…
When the krill vanishes the whales are left to starve.
This krill is getting ready to leave his shell. Zillow just dropped my (zillow wish) home’s zestimate by $5000 IN ONE MONTH! Surprised even me by their stepped up race to reality. The drop in prices around me in “higher priced” - almost gated communities ( only thing keeping out the riffraff was the absurd prices) is breath taking. This, coupled with the near disappearance of the morning rush hour traffic makes me smell recession3 if QE3 doesnt get here quickly. My non-whalefeeding mini-palace can go REO while I roam the high desert looking for Aladinsane.
my zestimate varies as much as 50K in a single year. Right it’s on the low side.
Foreclosures are down in the city, but the party may not last
PHYLLIS FURMAN
Thursday, February 16, 2012
Foreclosures are down sharply in the city — but the good times may not last.
The number of New York City homes hit by foreclosure notices was 621 in January, 53% lower than in January 2011 and up 2% compared with December 2011, said RealtyTrac, a foreclosure-tracking firm.
But foreclosures could start climbing again in the wake of the mortgage and foreclosures settlement between 49 state attorneys general and five of the nation’s largest lenders.
The settlement presents clear foreclosure guidelines for lenders, meaning they’ll be getting back to business after a self-imposed hiatus.
…
Trade deficit widens in January based on increase on imports from China.
DUH.
Government borrows money into existence and spends it into the economy. People buy stuff with that money. Since the world has a global labor wage 1/10th ours, much of what poeple buy is imports. The money flows back out of the US economy.
The $1.3T a year US federal deficits is what is funding the entire wrold’s massive trade imbalances. When we’re finally forced to stop those deficits…. doom.
“Since the world has a global labor wage 1/10th of ours, much of what people buy are imports. The money flows back out of the U.S. economy.”
There it is. And it has never been easier than today for money to flow out and for imported goods to flow in.
The financial end is truly global, and as for the flow of goods the world’s oceans have become as large salt-water lakes. Port facilities are modern and efficient and shipping cost are low. And over the past decade-or-so important infrastructure investment has been made internally in developing countries so as to get goods from the factories to the ports so as they can easily loaded aboard ships.
Somehow this has to be turned around; Somehow we Americans have to find a way to keep the money we spend circulating at home rather than immediately flowing out and ending up somewhere else. But I have not a clue as to how this can be accomplished.
Tariffs? Protectionism? Our “trading partners” do it. The Chinese force us to build automobile factories in China if we want to sell there.
You’re probably right. Physical barriers have come down so the only thing left is for political barriers to go up.
But there’s a large politcal cost for doing so, maybe an economical cost too (i.e. Hawley-Smoot).
India won’t let Walmart in the country.
Exactly, everyone demands free and unfettered access to US markets, while they jealously protect their own.
The elite in our country have let them so they could steal the wealth of our middle class. Stocks went through the roof. They fired people here and lent them money so they could continue to buy the same goods at the same price, only now the corporation can produce the goods for 20-40% less. All that profit flows to stock holders and CEO’s. The looser of course is the worker who trades valuable engineering or manufacturing experience for running his own tanning salon, or becoming a realtor.
You seriously don’t understand what Walmart would do to a nation with 1.2 billion people. That’s billion, baby, not million.
Economics rationally understands that Walmart is actually correct - efficiency, productivity, etc.
What it doesn’t get is that if those people go on a rampage, there’s not much that Walmart can do. That’s outside the predicted “model”.
I go to India yearly. You don’t. I speak the language (hard-fought learning). You don’t.
You are arguing a model. An ideal model that exists only in fairy tales. It’s a good model actually but not one that can be realized in the real world.
And all along I thought you were from India…..
I go to India yearly. You don’t. I speak the language (hard-fought learning). You don’t.
Somehow? First we have to fix our special kind of stupid.,/s> The rest is already done.:
http://abcnews.go.com/WN/fullpage/tour-made-america-house-13001236
http://abcnews.go.com/WN/MadeInAmerica/
Google: made in america
As long as people keep believing the myth of labor cost and quality, we’ll continue to be the corporations’ suckers.
Guilty. Bought a computer in December. I’m sure the store replaced the inventory. I expect it to last at least 5 years. I had the previous one for over 8.
Well I closed yesterday on a new property. 31 acres with a home directly adjacent to my existing 40. Sowing the seeds for my retirement.
Palmy, you were asking about Glacier Park the other day. My little spread is 90 +/- miles south of the park. Located between two wilderness areas, one being the Bob Marshall complex. Absolutely stunning scenery. Let me know when you’re headed up. If I happen to be there maybe we can do a meet-up. You could even use my place for a home base while your visiting.
SV, congrats on your new spread and thank you for your kind offer, I just might take you up on it, if I can get the cardio in a little better shape. Montana is one state I’d like to visit before I shuffle off the old mortal coil, so to speak. If this country ever reverses course, Montana will be the place to be. For sure it has captured the imagination of many an artist over the years.
+1,000
I might not want to live there but I’m dying to get there with my camera and tripod.
Please, please, please, invite me too!
Oh alright. Only if you promise to behave.
This will all depend on my schedule this summer. I plan on spending at least two weeks up there but that depends greatly on my presently very busy work schedule. I would extend the same invitation to all HBBers. Combo can bring his bucket o’ cash. Jeff can hunt for deadbeats in the forest. Puss can whip up a middle eastern dinner. RAL can spread the message of truth. PBear on the violin. Polly explaining complex legal concepts. Oxy B-slapping the rest of you. Sorry B-Skye, no boat dock. Hwy explaining how to decode his posts. Allena waxing poetic. Liberals, conservatives, libertarians, reynolds wrap party.
Busy day today. Will check in later.
And of course, the ring master himself, BJ.
YAY!!!
I’ll bring the food. Got instruments?
Don’t make me say I’m going camping. LOL
B-slapping? I’m not sure if this is good or bad…
Keeping it real amongst the HBB. (Good)
Puss can whip up a middle eastern dinner.
Why did you have to say that?
Now, I’m dreaming of a perfect Persian pilaf. Redolent with saffron, cardamoms, pomegranates, almonds, carrots and dill.
Damn you, damn you.
Or a mujdaddara (rice and lentils and fried onions!)
Oh, those fried onions!
You just had to go there, didn’t you? 8-|
Glllllllggggggghhhh…mujdaddara. (drool, slurp.)
“Montana will be the place to be.”
Pray hard for global warming and a tilt of the Earth’s axis, for good measure.
Congrats, SV guy. Montana is mighty cold, but looks breathtaking.
LOL
Long apocalyptic thoughts much?
History tells us that Americans are unique among world cultures to have disproportionately large amount of thoughts about an apocalypse.
History also tells us that it’s extremely unlikely to happen under anyone’s life time.
I’ll bet against it. In fact I’ll bet on “prices will drop steeply, nothing much will happen, and life will go on.”
Got anger and frustration?
Sounds wonderful. Also sounds like an ingredient of a strong recovery to me.
SV,
You’ve inspired me!!!
I’ve been dreaming about it for a while.
Me and my camera are gonna take a two-week trip through Wyoming-Montana-Idaho this late summer.
Hello, wide-angle!
Make sure you take a tele too. I did a very similar trip 2 years ago, the wildlife and scenery are both incredible. I started in SLC, when up through the Tetons and Yellowstone to Montana, what a great trip! It was truly something to see, you’ll have a great time!
I took a 11-16MM F2.8 and a 100-300 F4 as my primary lenses, I should have splurged and rented a 600MM F4 I didn’t realize how far away the wildlife is in the parks.
Have a great time!
Darn! Didn’t realize that.
No big deal. Plenty of time. Will rent the critters.
I’m a whiz at the normal focal lengths (<= 135) but I severely lack experience at the longer stuff.
Any more pointers?
Stop by the small local airports and buy yourself a scenic ride.
Bring a long zoom and use fast shudder speeds.
“I didn’t realize how far away the wildlife is in the parks.”
You must have gone to the wrong parks. We visited Yellowstone last July, shortly after this story broke. Hiked some in the Grand Canyon of the Yellowstone, though did generally avoid the back country. Saw lots of bison and elk at close range, but no bears or wolves.
Yellowstone grizzly death puts bear attacks in focus
By Laura Bly, USA TODAY
Updated 7/8/2011 6:21 AM
UPDATE, 6:30 a.m. ET Friday: Yellowstone National Park officials will not hunt the mother grizzly that killed a hiker Wednesday because the bear was acting naturally to protect its cubs. The victim was identified as Brian Matayoshi, 57, of Torrance, Calif., who was killed about 11 a.m. PT while hiking the Wapiti Lake trail with his wife, Marylyn.
Wednesday’s fatal mauling of a hiker by a grizzly bear in Yellowstone National Park, the first such killing in a quarter century, has raised the hackles of many wilderness enthusiasts - and spotlighted techniques for avoiding encounters.
CAPTION
By James Peaco, AP
The victim and his wife, whom park officials were expected to identify today, had hiked about a mile and a half along Yellowstone’s popular Wapiti Lake Trail when they surprised a grizzly sow with two cubs. According to the National Parks Traveler, the husband told his wife to run and she did not witness the attack. The bear later came after her, and she dropped to the ground. The bear then grabbed the wife by her daypack before releasing her and leaving the area; her cries alerted nearby hikers who called 911 for help. Rangers have closed all trails and backcountry campsites in the area, which is south of Canyon Village.
…
“Greater love has no one than this, that he lay down his life for his friends.”
Wow. I remember seeing a story about some exotic breed mother hen (a chicken). Suddenly all the chickens in the yard scattered and the owner looked at the sky and saw the hawk. The mother hen ran and left her brood, but she ran back, covered them and the hawk attacked her. But the brood was saved.
One wonders how one will react when coming face to face with The Hawk. This man acquitted himself with courage and honor.
A Natural History of the Chicken is available on DVD at PBS– probably the most charming documentary of the decade.
Factoid: All hens have the stop-and-squat instinct when something large looms overhead; that’s why they call them “mother hens,” and how roosters get to have their way with them.
We used to have a hen who would stop and squat so my son could pick her up and throw her like a football back down the hill to the chicken coop every afternoon. Given an aerodynamic boost, chickens can indeed fly.
Given an aerodynamic boost, chickens can indeed fly.
LOL
ahansen: “A Natural History of the Chicken is available on DVD at PBS– probably the most charming documentary of the decade.”
Nice catch. I have the DVD. Fantastic.
Yay for netflix!
Yellowstone/Grand Tetons
You might even inspire me to post some photos somewhere…
That will be an interesting direction for you to go with with your photography.
My current favorite is travel/Spain/Geometry/#5.
I agree.
I’m trying to scale new heights. New challenges. That kinda thing.
SV guy, is part of the Bakken Formation under your property?
I could only wish. Being an oil tycoon might have its advantages. All of the Bakken formation is well east of me. At least that is what they say.
Congrats!
71 acres sounds like you secured your retirement activities + “back therapy”
(especially iffin’ you do it all Amish work-tool like.)
“The Bob”
[Hopin' the Drill! Drill! Drill! fight$ gearin' up on the Eastern $lope doesn't $pill over to yourin' side SV fella]
Congrats, SV! Always wise to add a little more perimeter whenever possible. Would definitely be up for some summer horse-packing when everything thaws. In the meantime, enjoy the upcoming spring, and (altogether now…) watch out for the bears.
At what point will the Fed resume its central banking malpractice, enabling it to siphon more wealth into the coffers of its Megabank constituents?
Richard Fisher: QE3 would be like ‘medical malpractice’
By Paul R. La Monica March 5, 2012: 2:21 PM ET
Most Federal Reserve speeches are a chore to make it through. And then there’s Dallas Federal Reserve president Richard Fisher. I’ve had a man crush on Fisher for a while because his remarks are often peppered with a refreshing dose of non-wonky references to things like tequila, Washington Irving and Bob Dylan.
I also appreciate the fact that Fisher is a bit of a contrarian. He is an unabashed inflation hawk who remains concerned about the risks of more stimulus from the Federal Reserve even at a time when long-term bond yields are near historically low levels and few economists are worrying about price pressures outside of those at the gas pump.
He also has a curious investment portfolio. Uranium? Really?
But Fisher, who was a voting member on the Fed’s policy-setting Open Market Committee last year and dissented with Ben Bernanke and his band of doves several times last year, may have outdone himself with regards to outspokenness in a speech Monday.
Talking to the Dallas Regional Chamber of Commerce, Fisher blasted investors for calling for a third round of quantitative easing, or QE3, by the Fed.
“I am personally perplexed by the continued preoccupation, bordering upon fetish, that Wall Street exhibits regarding the potential for further monetary accommodation—the so-called QE3, or third round of quantitative easing,” he said, adding that “trillions of dollars are lying fallow, not being employed in the real economy.”
…
If anyone cares, I’m long QE3.
I don’t care what Fisher says. He’s basically irrelevant.
I am going to ignore your comment, on reflection that New York folks typically discount anyone from outside New York as irrelevant. Fisher has an MSM bully pulpit and he uses it freely, which makes him relevant.
I don’t get what the Dallas guys have against the Bernanke. Can anyone who gets it kindly offer comment?
Perhaps it is the perception that the fruits of QEs 1 and 2 mainly landed on Wall Street Megabanks, leaving big states like California and Texas shivering in a cash-poor deep freeze. But this is just an off-the-top-of-my-head conjecture; would be curious to know the real issues Texans have with the Bernanke.
Bob McTeer, Contributor
A former Dallas Fed president, I cover the economy.
+ Follow on Forbes
Washington
3/09/2012 @ 12:56PM
Sterilizing QE3
I find bizarre reports that Federal Reserve policymakers are considering sterilizing a new round of bond purchases in order to “subdue worries” about potential inflation.
Here’s how the WSJ put it in the first two paragraphs of its story on March 8:
“Federal Reserve officials are considering a new type of bond buying program designed to subdue worries about future inflation if they decide to take new steps to boost the economy in the months ahead.
Under the new approach, the Fed would print new money to buy long-term mortgage or Treasury bonds but effectively tie up the money by borrowing it back for short periods at low rates. The aim of such an approach would be to relieve anxieties that money printing could fuel inflation, a fear widely expressed by critics of the Fed’s previous efforts to aid the recovery.”
The odd thing is that unintended sterilization is exactly what happened during the so-called QE1 and QE2. The Fed purchased bonds, which created an equal amount of bank reserves and deposits (money). Normally, because of fractional reserve banking, this would lead to a further multiple expansion of bank deposits and the money supply. That mostly didn’t happen because the banks held onto the excess reserves created rather than lend or invest them. Multiple money expansion did not happen and expectations of accelerating inflation were not met.
…
I am going to ignore your comment, on reflection that New York folks typically discount anyone from outside New York as irrelevant.
You miss the point.
He’s not irrelevant because he’s not from New York.
He’s irrelevant because he’s using the MSM. That’s actually the last pulpit of the disenfranchised. He’s ALREADY been eviscerated and made irrelevant. That’s precisely why he’s giving speeches.
You academics never quite figure it out, do you?
Not an academic, but yes.
A basic understanding of human psychology trumps math, physics, economics and accounting, baby!
Also, no anger. Just a cold appraisal of the facts.
Hence, QE3.
Fisher is a meaningless nobody.
“A basic understanding of human psychology trumps…Hence, QE3.”
I’ll be sure to call you on that later when QE3 crashes into a wall of election year political opposition. Eventually the near-zero returns on their CDs may lead Gray Panthers to run riot on the Fed.
FT dot com
March 9, 2012 3:06 pm
Old and frugal pay the highest price
By Sarah Gordon
On Friday most of the private investors holding €206bn of Greece’s debt accepted that they should receive less than half of the value of their bonds. Painful as such a haircut must be, it pales into insignificance compared to the years of austerity – or worse – that the Greek people face in return for the bailout their country has received.
The vast burden of government debt in Greece and the rest of Europe is likely to weigh on taxpayers and economies for years to come. But there are other, more subtle ways in which the costs of the financial crisis have been deferred.
This week the UK’s National Association of Pension Funds said the impact of the Bank of England’s quantitative easing policy had been to increase the shortfall in corporate pension schemes by £90bn. The total shortfall was last estimated by the pension regulator at £471bn, just under a year ago.
The central bank’s QE policy, which involves it buying government debt, or gilts, was begun in March 2009 to help to keep interest rates down and thus support the economy. One result has been that savers, such as pensioners buying annuities, have received much less income from their savings than they anticipated. Another has been that, since gilt yields are often used as a proxy for investors’ future earnings and inflation, estimates of the shortfall in UK companies’ final salary pension schemes have ballooned.
…
Who put the Fed in charge of allocating the U.S. wealth distribution? And why don’t retirees rise up in arms against their War on Savers?
The ignorance of America’s tutored masses never fails to shock me.
Nobody bets on the AARP revolution!
Just look at the debt, just look at the Fed’s 2% inflation-guaranteed policy, just look at the fact that Congress is stupider than a rock and you’d bet on QE3 too.
Don’t let your emotions get in the way of the facts.
“…look at the fact that Congress is stupider than a rock…”
I suppose I may have overlooked some of the relevant facts.
“Nobody bets on the AARP revolution!”
Tax policy makers do. Even the people who really, really want to convert to a consumption tax and don’t care about the whole regressiveness thing care that AARP would have a fit.
“You paid income tax while you were earning and now they want you to pay tax on your savings while you spend it” is a great sound bite. Whether most of their members actully have savings is probably irrelevant.
And I completely agree on the whole talking to the MSM as a sign of irrelevance. Pundits talk to the press. Politicians talk to the press in carefully controlled ways. Unelected policy makers who have any sort of influence say no comment.
Nobody IMPORTANT has EVER talked to the press in history.
It’s all a worthless play-believe-democracy exercise.
Anybody who has actually played the power game understands a few things that the hoi polloi can never grasp.
All real rules take place behind the scenes in clubs from Connecticut to Maryland. If you’re not invited, you will never even know what actually happened.
Sorry Ben!
I thought this was a solvency crisis and not a liquidity crisis? The Bernanke knows it is and will do anything in his power to stave it. If that means QE3 then it means QE3.
I think it means QE3.
Anybody who has actually played the power game understands a few things that the hoi polloi can never grasp.
You mean the saying “Pay no attention to that man behind the curtain” doesn’t reflect we all get that?
“Unelected policy makers who have any sort of influence say no comment.”
Federal Reserve Chairman Ben Bernanke Holds First Fed Press Conference in History
PHOTO: Federal Reserve Board Chairman Ben Bernanke testifies before the Joint Economic Committee April 14, 2010 in Washington, DC.
Federal Reserve Holds First News Conference
By DAN ARNALL (@ABCMoneyGuy)
April 27, 2011
Westminster Abbey and the Royal Wedding are so overhyped; the historic story of the week will take place on C Street in Washington, D.C. today.
At 2:15 p.m. ET, Ben Bernanke, chairman of the Federal Reserve, will make waves in the world of economists and Wall Streeters. For the first time in the 98-year history of the nation’s central bank, the chairman will talk to the press after an interest rate decision, fulfilling a promise he made at his first confirmation hearing back in 2005.
At the time he said, “Under Chairman Greenspan, monetary policy has become increasingly transparent to the public and the financial markets, a trend that I strongly support.”
…
My guess is it has more to do with positioning for the post Bernanke era. These guys know that he is going to be gone as soon as inflation starts. Then they will be looking to replace him with some one who has said all along that we shouldn’t be doing this.
Wouldn’t the Fed want to stoke inflation concerns, thus pushing people into investments like real estate and stocks?
On policy, Fisher is to Volker as Bernake is to Greenspan.
Too bad Fisher wasn’t appointed instead of Bernanke back when. His name was mentioned, I guess he’s still pissed.
“If anyone cares, I’m long QE3″
I also believe it’s either QE3 or WW3.
I’m long QE3 cubed.
America is lucky to have collectively dodged the Herman Cain bullet — what a complete moron! We all owe a debt of gratitude to the legions of women who conspired to keep a black Republican businessman out of the White House.
GOP Candidates Finally Go Past Bernanke
After months of taking shots at the Fed chairman, Republican candidates finally explain who they’d like better
By Danielle Kurtzleben
October 12, 2011 RSS Feed Print
By now, there are a few hard-and-fast rules about the debates for the 2012 Republican presidential nomination: businessman Herman Cain will mention his 9-9-9 plan at every opportunity, Texas Gov. Rick Perry will focus on energy (almost to a fault), and Federal Reserve Chairman Ben Bernanke will take a beating.
Such was the case again at last night’s debate in Hanover, N.H., when candidates such as former House Speaker Newt Gingrich, former Massachusetts Gov. Mitt Romney, Texas Congressman Ron Paul, and Cain all stated their intention to fire the Fed chairman, who was appointed by George W. Bush.
But last night, Bloomberg TV’s Julianna Goldman pushed candidates beyond this talking point, asking, “[W]hich Federal Reserve chairman over the last 40 years do you think has been most successful and might serve as a model for that appointment?”
The two candidates who responded, Cain and Paul, offered revealing answers that may invite future criticism. Referencing his own time at the Kansas City Fed in the 1990s, Cain chose Alan Greenspan, who served as Fed Chairman from 1987 through 2006. Though Greenspan was heralded during his time as an architect of prosperity—”Maestro,” as Bob Woodward called him in an eponymous book—hindsight has been less kind. Greenspan’s approach to monetary policy, specifically his targeting of low interest rates, is now seen as a key contributing factor to the housing bubble that helped lead to the current financial crisis. Greenspan himself admitted in 2008 at a congressional hearing that he had “found a flaw” in his ideology.
Then again, Cain didn’t get terribly deep into monetary policy in his answer; when asked why he chose Greenspan, Cain responded, “Because that’s when I served on the board of the Federal Reserve in the early 1990s,” then added that he admired how Greenspan oversaw the fed and “coordinated” with the Federal Reserve banks.
Paul responded by first slamming Greenspan as a “failure” and then naming Paul Volcker as his Fed Chairman of choice. “He at least knew how to end—or help, you know, end the inflation,” he said. Volcker, who served as Fed chairman from 1979 through 1987, helped to end the period of stagflation in the 1970s.
…
Those guys are opposites. And as broke as our nation is, I believe they are still old enough to be legitimately retired.
Good point! If you delay retirement long enough, it costs nothing!!
I found the link to the Fed’s white paper on housing and included it below. There is some good stuff in there! Will have to give it a thorough read after coffee.
Bernanke takes GOP heat over housing paper
By Peter Schroeder - 03/01/12 12:34 PM ET
Federal Reserve Chairman Ben Bernanke took heat from Senate Republicans on Thursday after the central bank sent a report to Congress outlining possible ways to reform the housing market.
GOP lawmakers bristled over the 26-page document sent in January, which they said represented an uncalled for encroachment into their jurisdiction by the politically independent Fed.
Sen. Richard Shelby (R-Ala.), the ranking member of the Senate Banking Committee, called the report a “troubling new development.”
“The Fed has been and should continue to be a useful resource for information and analysis on the housing market,” he said. “It should not, however, become an active participant in the legislative debate over the future of housing finance. Accordingly, I hope that the Fed’s recent foray into housing policy will not become common practice.”
…
Take-home message of opening paragraph:
“Housing market negative wealth effects contained to -$7 trillion”
The Fed has certainly come a long way from back around August 2007, when the claim was that “subprime will be contained to $200 billion.”
For the mathematically challenged, $7 trillion is 3400% greater than $200 billion:
($7,000,000,000,000/$200,000,000,000 - 1)*100% = 3400%.
A near miss, though!
So, are falling housing prices — meaning more affordable housing — good or bad for the economy?
http://www.bloomberg.com/news/2012-03-09/states-hardest-hit-by-real-estate-collapse-lead-u-s-labor-market-recovery.html
“Arizona, California, Florida and Nevada — the states that were most hurt in the real estate collapse over the past five years — are now leading the U.S. labor market expansion. The four states added 222,100 jobs from August through December, accounting for 28 percent of the increase in U.S. employment in that period, according to Labor Department figures. Their outperformance may continue.”
Ill bet a lot of people would rather be in New York City than in Florida, Arizona or Nevada. But they can’t afford it. Ben said it — cheap housing was the key to Arizona’s success.
I believe falling prices are good; why else would the U.S. federal government have official policies and entire government agencies devoted to providing affordable housing?
The “affordable housing agencies” is classic Orwellian doublespeak. Politicians don’t benefit from affordable housing with lower cash flows to contributors and lower tax revenue. They do benefit by looking like they’re trying to provide affordable housing.
Now that many parts of California have much lower housing costs than, say, NYC or Boston, we can soak up some of the cream of the crop of new college grads, who can afford to live here. The more California housing prices crash, the more we can benefit from the green shoots of human capital taking root here and providing the foundation for the next economic boom.
Is it hard for top policy makers to grasp this dynamic?
Unfortunately, metro SF and LA are in the same boat as metro NY — the bubble never fully deflated. And I don’t think the cream of human capital wants to live in the inland Valley, especially if water gets scarce.
You know, if it weren’t for being in the Euro and having their currency not deflate, and given the low birth rate in Italy, perhaps low prices would encourage the cream of human capital to move there!
I already moved back to the city after my parent’s generation moved to the suburbs. I could reverse my great grandparents’ choice too! Then again, that volcano looming over Naples is as scary as the San Andreas fault.
And I don’t think the cream of human capital wants to live in the inland Valley, especially if water gets scarce.
Recall that conservative piece, “The Two Californias.”
Exactly, while prices might be down from their historical highs in LA and SF, they are hardly “affordable”.
The policy makers are irrelevant.
The dynamic of “doing your 20’s in New York” is so powerful that it holds down wages for that entire age cohort.
So it was, so it is, and so it ever shall be.
There are no “forever” clauses in investing but this is the closest that you can come to that.
‘The dynamic of “doing your 20’s in New York” is so powerful that it holds down wages for that entire age cohort.’
I personal prefer people who get the dynamic of “doing your 20’s in San Diego,” but that’s just me…
Hi.I was too sensible to do my thing in NY or Paris in my twenties. So it will have to be in my fifties (what’s left of them) or my sixties. Location my be San Fran instead. I can’t wait. The glamour of my work have worn off.
“Location my be San Fran instead.”
Good combination of natural beauty, culture, mild weather and few New Yorkers.
“Good combination of natural beauty, culture, mild weather and few New Yorkers.”
Why are New Yorkers so annoying?
Why are New Yorkers so annoying?
We’re better than you. We were always better, are currently too, and so shall it always be.
We’re certainly smarter than PB, and less annoying.
PS :- I find SF people too lazy for words, and totally annoying. They also break “appointments” and “confirmations” at a rate that would be totally unacceptable in NYC. They’re just lazy and liars. We’d just tell that to your face not hide behind engagements.
The main problem with New Yuckers is they have no sense of humor. And they take themselves WAY too seriously.
And they are much more annoying than the people they accuse of annoying them (which in and of itself is annoying).
But otherwise, they are a joy to have around…
“Arizona, California, Florida and Nevada — the states that were most hurt in the real estate collapse over the past five years — are now leading the U.S. labor market expansion.”
Labor market expansion in Florida? Not around here.
The very states that were the most out of touch with reality.
Good.
(also a good reminder to never move there)
(was referring to over-priced houses and the ensuing collapse)
Labor market rebound? So instead of 12% it’s now only 11%?
“Labor market rebound? So instead of 12% it’s now only 11%?”
As long as you don`t count the people that quit looking for work and are no longer counted in the labor market.
Labor force participation: http://data.bls.gov/timeseries/LNS11300000
“Ill bet a lot of people would rather be in New York City than in Florida”
NYC, no. Dobbs Ferry, yes.
Manhattan versus Plant City. I’ll take Manhattan. Manhattan versus Siesta Key…Very difficult to decide at that point.
Visited an office yesterday to do computer work, and I couldn’t help but notice the shiny new 1-ton 4×4 pickup truck parked away from everything else. It didn’t move while I was there, so before I left I popped the question, “Who is married to that new truck?” The engineer I was working with (who would never consider such a purchase) leaned closer, smiling, and quietly whispered, “It was *only* $63,000.”
How uniquely American!
The good folks from Top Gear (the original British version) just love to make fun of the American love affair with the pickup truck.
And 63 grand for a truck? Is that how stupid we have become?
And 63 grand for a truck? Is that how stupid we have become?
And this is “hourly-wage” fly-over country.
The good folks from Top Gear (the original British version) just love to make fun of the American love affair with the pickup truck.
What I find strange is that a young Polish guy who helped us on our trip last summer (and I’m still in communication with) would love nothing more than to own a big 1-ton American pickup truck. I totally don’t get it. He just thinks they’re cool. So there must be some sort of universal appeal that most HBB types are immune to.
Having said that, if I needed one I would buy one.
The used ones are dirt cheap now. I bought a ‘98 Dodge 2500 for $1,800 last week.
The big ass V8 gives it plenty of power and gets a stunning 8 mpg.
Wait until he has to fill the tank
Yeah, he knows, especially with gas at something like 8-10 dollars a gallon there and salaries nowhere near the USA.
Did it have a pair of nuts hanging from the hitch?
Aren’t those classy?!
I really love how it’s getting easier and easier to spot the morons these days.
LOL! They’re self identifying now. Also, I’m sure that plenty of young pretties are attracted to the Neanderthals that drive those rigs.
Did it have a pair of nuts hanging from the hitch?
LOL! Several years ago we pulled up to a street light in Klamath Falls, OR, and there but for the grace of god were a pair of rubber nutz hanging from a pickup with a “stars-n-bars” flag in the rear window, a tall lift kit and huge tires. My wife asked, “What’s that hanging down there?” I replied that housing is cheap here, “Want to look around?”
As redneck as having the stupid skulls with fangs. You see them a lot between the Inland Empire and Phoenix (including those two areas).
Noting says “total moron” like a 64K pickup truck. It makes a tramp stamp look positively intellectual.
LOL!!! It’s the male version of a tramp stamp! That is so perfect! Thanks Eco!
Awesome.
This is what makes the HBB memorable.
+1
Or a $40K Chevy Volt!
Most people have figured this out, apparently.
How else does one haul a 4k pound camper than with a one-ton pickup? Am I now to understand that campers are stupid, too? Should people give up such things that bring them happiness? Railing on people’s vehicle choices is truly snobbish, IMO. A friend of mine was bashing “gas guzzling trucks.” Yet, he drives 35k miles a year in his trendy little Subaru that he apparently feels is the only car anyone should drive. His yearly fuel consumption is more than some people in their full size pickup trucks. I think he’s an idiot for talking like he does, and I tell him so.
Good point. A 5.0 Mustang GT is on my possibility list since I tend to drive only about 8,000 miles a year. Gas hog yes. but I would tend to use less gas than people who drive 35,000 miles a year in a Toyota (my current make).
Railing on people’s vehicle choices is truly snobbish, IMO.
This was really about sticker shock, not the vehicle type. The median income in our corner of the world is $31k/yr.
And another one bites the dust…
“Orlando Sentinel staff
3:07 p.m. EST, March 9, 2012
Melbourne-based Mercedes Homes announced on its website this week that it is shutting down its building operations and liquidating its assets.
Mercedes has been building in a dozen subdivisions in the Orlando area, from Winter Haven to Satellite Beach to Daytona Beach, including Lake Davis Reserve, where homes were priced from $700,000 on up. The company also operated in Tampa and Jacksonville, as well as in Texas, North Carolina and South Carolina.
Realtors never give up. They must think the housing bubble is still on. Ad for an open house this weekend in Boston:
“ALL OFFERS WILL BE REVIEWED ON MONDAY MARCH 12. NO BEGGING, NO PLEADING, NO POUTING, NO EXCEPTIONS!!”
It’s a 4-bedroom for $1,575,000. Yea, it’s on pricey Beacon Hill, but give me a break.
http://www.newenglandmoves.com/real-estate/properties?page=1
“Realtors never give up.”
They have no choice, it’s what they do.
Years ago many of them gave up good jobs so as to become filthy rich as realtors. Now they are stuck ’cause there’s no going back.
Karma.
Bingo! I know a few, and boy are they stucco! One went back to school to get a Master’s in hopes of jump starting the old career.
Was he successful? I know someone with two masters from Georgetown and she works as a grocery store clerk.
He got a job at IBM as a software engineer
“Realtors never give up.”
Once you get in the habit of routinely lying to everyone you know, I guess it can be hard to stop.
Palm Beach County foreclosures back on rise
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 4:35 p.m. Thursday, March 8, 2012
WEST PALM BEACH — Nearly 1,200 Palm Beach County homeowners went into foreclosure last month, an increase of 58.5 percent from the same time in 2011 when banks were still reeling from the robo-signing scandal.
The Palm Beach County Clerk and Comptroller reported the 1,198 new February foreclosure filings on Thursday.
Clerk Sharon Bock said she wasn’t surprised by the increase from last year because banks held back foreclosures for much of 2011 while they reviewed their paperwork and procedures for flaws.
http://www.palmbeachpost.com/money/foreclosures/palm-beach-county-foreclosures-back-on-rise-2225743.html - 75k -
On The Road Again lyrics
Songwriters: Nelson, Willie;
One, two
One, two, three, four
On the rise again
Just can’t wait to get on the rise again
The life I love is watching Deadbeats shut the door
And I can’t wait to get on the rise again
On the rise again
Beats goin’ places that they’ve never been
Leavin’ houses that they`ll never see again
And I can’t wait to get on the rise again
On the rise again
No motgage payments have just come to an end
And no HARP programs gonna help my friend
I`m just so glad they`re on the rise again
On the rise again
Livin` for free has just come to an end
No more sad songs for all your 60 minute friends
And I`m so glad they`re on the rise again
On the rise again
On rent your cash is what you`ll have to spend
No more house payments that you didn`t send
And I`m so glad they`re on the rise again
On the rise again
Just can’t wait to get on the rise again
Watching Deadbeats as they`re walkin` out the door
And I can’t wait to get on the rise again
And I can’t wait to get on the rise again
Here in Santa Clara valley, anything that’s in reasonable condition and priced under $400K is selling in a matter of days.
I don’t know what it means, but it’s certainly a dramatic change from the recent past.
Who are these people that afford that?
Dual income, Silly Valley couples pulling down 200k+?
Anything under $400K around here is very modest (SFH). Probably in a very undesirable area.
http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/9134936/Mortgage-rates-start-to-rise.html
Mortgage rates starting to rise in the UK. With the Weimar Republic-like, created-out-of-thin-air trillions in liquidity pumped into the US and global banking systems by the Fed and central banks, is there any way interest rates can NOT rise?
http://washington.cbslocal.com/2012/03/10/president-obama-strikes-back-at-gop-critics-on-gas-prices/
Obama doing “everything he can” about high gas prices - LOL. Neither the Establishment GOP or Dems will acknowledge the core cause of rising gas (and commodity) prices: the tsunami of Bernanke Bucks, backed by nothing, and consequent mega-speculation by the Fed’s primary dealer bank. This will soon be feeding hyper-inflation for consumers and a stealth tax via inflation on savers and the general public. Then again, this is what 95% of the electorate continues to vote for.
Hyper inflation for consumers would require rising wages, which won’t be happening.
Oil goes up, gas goes up, people have less money to spend on other stuff, recession returns as jobs are loss. Demand for oil goes down. Eventually the tanks and old tankers overflow with oil that is being bought up to keep prices high in the face of falling demand. Crash.
“Demand for oil goes down”
In the US. There are 6 billion other people in the world.
When the US catches a cold, the world catches the flu.
Correct, Darrell. I don’t know why exactly people won’t understand this, but they just refuse to. I think it has to do with living for decades under steady inflation, but then they’re abruptly cut off from income and credit sources.
I keep telling people that in order for prices to go up such that they require a wheelbarrow of cash, you have to first have the cash to fill that wheelbarrow, but again, they just won’t listen. So delusion keeps driving everything, and all socio-economic mechanisms become more and more unbalanced. Soon, no amount of lubricant will keep this machine running, and your culture ends up like that washer or dryer on break.com that was run with a brick inside the basket until it literally shook itself into pieces.
Excellent point you made: “in order for prices to go up such that they require a wheelbarrow of cash, you have to first have the cash to fill that wheelbarrow.”
Not everything is scarce. Some things, such as ocean view real estate in California, are scarce. But it turns out most of those scarce things are wants and not needs. A great surgeon is scarce and you have to be prepped to have the wheelbarrow of cash in case you need the services of one in the future. This potential is why I enjoy driving my one car, a Toyota economy car, while people earning $70,000 less than me drive Infinitis, BMWs, Lexus cars, and the like. I can squirrel away my cash in 4% yielding Arizona municipal bonds instead. And in gold bullion.
Op-Ed Columnist
Mitt’s Rich Predicament
By FRANK BRUNI
Published: March 10, 2012
MITT ROMNEY may be as close to a walking, talking dollar sign as presidential politics has ever witnessed. If money were made flesh, it would apparently have fair skin, flawless hair and an off-key tropism toward patriotic anthems.
I say that only partly because of all of those awkward asides of his, the ones that keep reminding voters, who need no further reminding, that he’s loaded. And I’m not really focused on just how loaded he is. With a personal net worth in the vicinity of $225 million, Romney is no Warren Buffett, no Bill Gates. There have been more affluent candidates for the presidency. For lesser offices, too. Michael Bloomberg could buy and sell Romney several times over and still have enough left for a couple of Cadillacs.
But every discussion of Romney’s campaign, no matter the angle, winds up referring to riches. It’s uncanny. Wealth is the Go on the Monopoly board of Mitt: you’re either starting there, heading there or circling past it. If only you collected $200 each time.
…
There is no way Romney wins the general election. Not only is he viewed as Mr. 1%, completely and hopelessly out of touch with the average American, but he continues to hammer away at Obama on unemployment and the economy when things are clearly better than 4 years ago when the smirking chimp handed him the reigns of an economy in ruins.
Romney might well win, as he has good chance to be viewed as a better choice than current occupant. That’s how it goes with elections.
Dream On
test
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Another new computer purchase?
I was getting a weird error message whenever I tried to post last night; don’t know if Ben fixed it or it went away spontaneously on its own.