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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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Evidence has recently emerged of growing dissension at top ranks of the Fed. How will this wash out?
March 28, 2012, 12:15 pm Legal/Regulatory | The Trade
Banking Regulator Calls for End of ‘Too Big to Fail’
By JESSE EISINGER, ProPublica
An annual report from a regional Federal Reserve bank is typically a collection of banalities and clichés with some pictures of local worthies who serve on the board.
And so it is with this year’s annual report from the Federal Reserve Bank of Dallas, whose pages are graced by the smiling, stolid portraits of board members who run local companies like Whataburger Restaurants.
But the text is something else entirely. It’s a radical indictment of the nation’s financial system. The lead essay, which is endorsed by the president of the Dallas Fed, contends that despite the great crisis of 2008, a cartel of megabanks is still hindering the economic recovery and the institutions remain too big to fail.
The country’s biggest banks look much as they did before the 2008 financial crisis — only bigger. They have “increased oligopoly power” and “remain difficult to control because they have the lawyers and the money to resist the pressures of federal regulation,” Harvey Rosenblum, the head of the Dallas Fed’s research department, wrote in the essay.
Having seen the biggest banks make risky bets, crush the economy and get rewarded leaves “a residue of distrust for the government, the banking system, the Fed and capitalism itself,” Mr. Rosenblum wrote.
It’s one thing for the Occupy movement to point out how bailing out the biggest banks — with little cost to their executives or shareholders and creditors — has demolished credibility. It’s quite another for top officials in the Federal Reserve system to put it in an annual report.
…
They must be pissed that Wall Street is fighting their efforts to improve regulation by playing Republicans off against Democrats with money.
It’s one thing for the Occupy movement to point out how bailing out the biggest banks — with little cost to their executives or shareholders and creditors — has demolished credibility. It’s quite another for top officials in the Federal Reserve system to put it in an annual report.
Wow. Just wow.
OTOH, I’m not surprised. I heard Dallas Fed president Richard Fisher speak at the University of Arizona b-school a couple of years ago. He was test-driving the well publicized “too big to fail” speech that he gave a few weeks later.
It didn’t exactly set off bombshells at the UA, but that’s to be expected. The evening lectures attract a lot of undergrad and MBA students, and they aren’t exactly what you’d call boat-rockers. If anything, they’re you-know-what kissers.
Fed should not over-commit to easy policy: Bullard
Related News
Fed’s Bullard sees U.S. rate hike in late 2013
Thu, Mar 22 2012
President and CEO of the Federal Reserve Bank of St. Louis James Bullard poses during an interview at the Federal Reserve Bank of St. Louis June 8, 2011. REUTERS/Peter Newcomb
By Clement Tan
HONG KONG | Fri Mar 23, 2012 6:21am EDT
(Reuters) - The Federal Reserve should be wary about “over-committing” to an ultra-easy monetary policy that has served the economy well in recent years but could be detrimental eventually, a top Fed official said on Friday.
“Some of the further actions that could be undertaken at this juncture would have effects far into the future, in an environment of continual improvement and repair for the U.S. economy,” St. Louis Fed President James Bullard said in remarks prepared for delivery at the Credit Suisse Asian Investment Conference in Hong Kong.
“Overcommitting to the ultra-easy policy could well have detrimental consequences for the U.S. and, by extension, the global economy.”
Bullard said rates may need to rise in late 2013, rather than in the following year as the Fed’s policy-setting committee has said. He is not a voting member of the committee this year, but he takes part in the central bank’s rate-setting meetings.
…
“…in remarks prepared for delivery at the Credit Suisse Asian Investment Conference in Hong Kong.”
“He is not a voting member of the committee this year”
$eparate thee chaff$ from thee wheat$, as RAL $uggested … down below.
Need for more Fed action unlikely: Plosser
WILMINGTON, Delaware | Thu Mar 29, 2012 12:49pm EDT
(Reuters) - It is unlikely that the U.S. economy will deteriorate or that prices will fall to such an extent that the Federal Reserve will have to consider taking more policy action, a top Fed official said on Thursday.
…
It’s manufactured music. Orchestrated.
Evidence has recently emerged of growing dissension at top ranks of the Fed.
Is this true dissent, or is it just noise to confuse the masses, and make them think that the way forward is not already foreordained?
How could you tell? On the one hand, the Fed certainly has a history of throwing out hints every which way to avoid telegraphing its future policy moves. On the other hand, Fisher has been talking about eliminating TBTF for a long time already.
Hmm… I’d like to know your thoughts on what the future holds. Was the bubble the last gasp of suburbia? Will exurbia go Mad Max? Will most cities go Detroit? Will it suck everywhere?
Maybe smaller cities that manage the contraction the fastest will be the best places to live. See, to me, buying a home is committing to a place and its people. I’m not saying you can’t rent and do the same, but buying a home means you’re really doubling-down on your belief that where you live won’t suck for a good while.
While on vacation, I got to talk to a lot of different people from all over the country. One guy, who coincidentally lives near where my parents grew up in rural Ohio, said it was awful there. Meth labs all over the place, burglaries, stripping empty houses, etc. His house was recently burgled and his gun collection is gone.
I realize that things change, and I’m not going to mope over the moved cheese. I simply have no idea how to maneuver the present to position myself for the future.
Do you dig into a community and *try* to make it better, or do you simply follow the jobs. I don’t know.
My friends and I continue to fiercely debate the future of the rust-belt (Buffalo, Cleveland, Troy, etc.). I don’t know if manufacturing will come back, I don’t know if the sunbelt is a farce… I don’t know if the coasts are the only places where “cool” people live. I don’t know.
I do know that Key West is basically becoming an outdoor retirement home. Pipes and plastic cups have given way to walkers and oxygen tanks.
Am I hallucinating, or are there no functioning centers left, only a patchwork of leveraged, fleeting activity?
“Do you dig into a community and *try* to make it better, or do you simply follow the jobs. I don’t know.”
Do what Wall Street does. Live quarter to quarter.
… and have your$elf a very merry christma$ too! :-/
“His house was recently burgled and his gun collection is gone.”
Not to nit-pic, not “gone” … just redistributed. :-/
“Key West is basically becoming an outdoor retirement home. Pipes and plastic cups have given way to walkers and oxygen tanks.”
That’s sorta poetica Muggy, juxtaposed to Jimmay & Cheese-burgers in paradise.
[Come to think of it, he is getting light-on-top ain't he?]
Do you dig into a community and *try* to make it better, or do you simply follow the jobs. I don’t know.
I dig in and try to make things better, as are members of my family who live in other cities.
As for finding work, well, what can I say? I’m a freelancer. I prospect for work every damn day and trust me, it’s not easy. Especially in this economy.
No, the affordable housing push didn’t cause the subprime crisis
Posted by Suzy Khimm at 04:38 PM ET, 03/29/2012
It’s one of the biggest misconceptions about the housing crisis: the belief that the government’s policies to promote affordable housing — particularly through Fannie Mae and Freddie Mac — fanned the flames of the subprime mortgage market, ultimately bringing down the entire economy.
In fact, a growing body of independent research confirms that it wasn’t the affordable housing mandate that led to the proliferation of risky mortgages. And the most recent evidence comes from the St. Louis Federal Reserve Bank.
Over the past few decades, the federal government has tried to promote affordable housing in two major ways. First, the Community Reinvestment Act encouraged banks to lend to low-income communities. Second, Congress mandated that Fannie and Freddie hit certain targets for lending to low-income and minority communities.
Researchers from the St. Louis Fed analyzed whether such policies “influenced origination or affected prices of subprime mortgages.” While they confirmed that Fannie and Freddie did make widespread purchases of risky, mortgage-backed securities, they conclude that such moves were not, in fact, the result of these affordable housing mandate.
“Affordable housing goals may have introduced some distortions and created perverse incentives in the mortgage market but these were not the driving force behind the tremendous growth of subprime and Alt-A loans in the private market,” explains Cristian deRitis, a director at Moody’s Analytics. Fannie and Freddie pursued what turned out to be the riskiest loans not to meet the affordable housing mandate, but instead “to increase profit,” as they were assumed to be higher yield, deRitis tells me.
My colleague Brad looked at some of the previous research on this, explaining why Barney Frank — a big proponent of Fannie and Freddie’s affordable housing mandate — isn’t to blame for the housing crisis, either.
This is a wonkblog post that can be found here:
http://www.washingtonpost.com/blogs/ezra-klein/post/no-the-affordable-housing-push-didnt-cause-the-subprime-crisis/2012/03/29/gIQADZ4YjS_blog.html
The St. Louis Fed report is here (pdf):
http://research.stlouisfed.org/wp/2012/2012-005.pdf
The link to the Barney Frank post goes here (there are some pretty good charts):
http://www.washingtonpost.com/blogs/ezra-klein/post/barney-frank-didnt-cause-the-housing-crisis/2011/11/28/gIQANqLH5N_blog.html?wprss=ezra-klein
pur$ued what turned out to be the ri$kiest loan$ not to meet the affordable housing mandate, but instead “to increase profit,”
$hould read: “to increase profit$,”
[Always trying to $lip that one by thee fill-in copy editor. $illy kid$]
Affordable housing goals may have introduced some distortions and created perverse incentives in the mortgage market but these were not the driving force behind the tremendous growth of subprime and Alt-A loans in the private market,” explains Cristian deRitis, a director at Moody’s Analytics.
So even the guys on Wall Street don’t think the affordable housing programs were to blame. But will this silence those who claim affordable housing programs were the cause? Never! The lie that the CRAs caused the bubble fits too well into their mindset to ever be discarded over something as silly as facts.
Did the bursting of the housing bubble scare off an entire generation of potential U.S. home owners?
Fed’s Bullard: Shift From Home Ownership May Last ‘Generation’
Friday, 24 Feb 2012 11:38 AM
Federal Reserve Bank of St. Louis President James Bullard said the 30 percent drop in U.S. housing prices since 2006 may prompt a generational shift to apartment rentals.
“My sense is that the housing debacle of the past five years may have scared off a generation of potential homeowners,” Bullard said today in a speech in New York. “New home buyers likely see homeownership as a fundamentally riskier proposition than earlier cohorts and therefore may be far more likely to rent rather than own.”
…
So far it’s working on me and my friends — but “scare off” may not be the best description. I’d say “price out” and/or “ransom.”
Here’s another: who will give Boomers the health care they think they’ve got coming to them?
There are a few other generational whipsaws dancing around the fire.
So far, I am “scared off,” but lower (more affordable) home prices could go far towards alleviating my fears.
Yeah, I think there are still quite a few who would get back into housing AND stocks if they didn’t appear to be so manipulated.
+1, Carl. That describes my attitude precisely.
“scare off an entire generation of potential U.S. home owners?”
Naw, only the ones that make between $2.00 - $10.00 more then the Federal Minimum wage.
$ee, it ain’t as bad as you might ponder.
It did in the 1930s. Lotsa folks who lived through that became permanent renters. By choice.
At least the second-home buyers and investors are stepping up to fill in for the missing owner-occupant buyers, to the tune of 39% of recent purchases!
ECONOMY
Updated March 29, 2012, 7:09 p.m. ET
More Investors, Vacationers Snap Up Homes
By DAWN WOTAPKA
Sales of investment and vacation homes surged last year, the latest evidence that investors and higher-income households are taking advantage of low home prices to scoop up bargains.
In its annual survey of investment- and vacation-home sales, the National Association of Realtors found that the number of homes purchased by investors rose 65% during 2011 to 1.2 million, accounting for 27% of all home sales. In 2010, investment properties accounted for 17% of all sales.
Sales of investment and vacation homes surged in 2011, the latest evidence that investors and higher income households are taking advantage of low home prices to scoop up bargains. Dawn Wotapka has details on The News Hub. Photo: Getty Images.
The number of homes purchased as second or vacation homes jumped 7% last year to 502,000—accounting for 11% of all transactions, up from 10% of all sales in 2010.
While the majority of homes sold last year went to traditional buyers who plan to use the home as a primary residence, their presence in the market declined to 61% from 73% in 2010.
During the housing boom, speculators were blamed for helping to inflate the bubble by snapping up homes, especially new homes, and then quickly reselling them as prices rose higher. That led to overbuilding. Some economists now believe that investors are helping to stabilize the market by buying up excess inventory.
While their activities could help to stabilize prices, they also are creating problems for some buyers. Real-estate agents say investors, and to a smaller extent vacation-home buyers, are outmaneuvering traditional buyers, who are less likely to have the financial means to pay cash for a home and may not devote as much time to searching for properties. The NAR survey found that nearly half of all investors and 42% of vacation-home buyers purchased their homes using cash. Traditional buyers, meanwhile, are seeing deals derailed because they can’t qualify for a mortgage or because appraisals for the homes they are trying to buy or sell come in too low.
“The last two to three years has been a battle between the first-time home buyer and the investor,” said Budge S. Huskey, president of Coldwell Banker Real Estate LLC, a national franchiser based in Parsippany, N.J. “Investors have won.”
In some of the hardest-hit housing markets, investors are the largest category of buyers. But unlike during the boom years, when many investors were buying properties to “flip” quickly for a profit, many of today’s investors buy the homes with plans to rent them out and sell them when the market improves.
“Obviously, it’s a great rental market, and it’s going to be a great rental market for a while,” said Geoffrey Jacobs, principal at Empire Group, a developer that has amassed a portfolio of nearly 1,000 single-family homes in Phoenix since 2009. Because the typical home that he buys is only about 10 years old, “it’ll compete well with a new home down the road when we go to sell the houses,” Mr. Jacobs said.
…
Here in Tucson, there’s a whole lotta snapping up going on. Especially in the “distressed property” market.
There’s just one little problem that a lot of these rental home in-VEST-ors haven’t thought about. That would be our city’s high rental vacancy rate. It was recently reported at 16%. Which means that your hot little in-VEST-ment house will be but one of many sporting a “for rent” sign.
However, our local in-VEST-ors aren’t known for their thinking skills. They remind of the sort who would be dazzled by the guys and gals who present those weekend real estate seminars.
From my own experience house hunting, I definitely think that the market is absolutely owned by the infestor class right now.
Where I’m at it’s mostly hot money flowing out of the SF Bay area. I’ve had 3 properties snaked out from under me by cash buyers who appear to be wanting to use them as rentals. If I had to guess right now, I’d say non owner-occupier buyers in my local market would be near 50%. (based on some data I’m seeing at work)
The question remains, what happens to rents when the market is absolutely flooded with these properties and job/income numbers are declining or stagnant?
The question remains, what happens to rents when the market is absolutely flooded with these properties and job/income numbers are declining or stagnant?
I can’t speak for the Bay Area, but here in Tucson, it seems like it takes about three years for in-VEST-ment properties to run into trouble. By “trouble,” I mean:
1. Rents aren’t covering the mortgage payments, and the appreciation fairy is nowhere to be seen.
2. Tenants are trashing the houses, not paying rent, and causing all sorts of trouble with the neighbors. And said neighbors are finding your contact info in the county assessor database and using it to send you sternly worded letters with attorneys mentioned on the cc: line.
3. You finally boot the bad tenants out, and then you’ve got quite the repair job. In the meantime, the house is vacant.
A lot of these houses end up back on the resale market. Or the in-VEST-ors just say “F— it!” and let the houses go back to the bank.
Are lots of these investor deals taxpayer-guaranteed, meaning that the U.S. taxpayer gets to make the bank whole in case the principle value of the loan exceeds the market value of the home when it is returned to the bank?
I’m noticing that peeps half my age are less interested in the following:
1. Car ownership
2. Home ownership
There are a variety of reasons why this is so, and I couldn’t begin to think of all of them. But the trend is there.
You must hang out with a “different” crowd than I do. I have yet to meet a kid who doesn’t want a car or a truck. My son’s HS Parking lot is packed with cars, so much so that parking overflows into the neighborhoods. How do your young friends get around the Tucson sprawl? Do they ride the bus with the Lucky Duckies? That can take forever. I know not having a car works for you, but you work at home. Most people still don’t have that luxury,
Houses? I think the word that houses are a bad investment has gotten around. Definitely not seeing the interest there.
I’m in the center of the city, and am seeing many more young people (meaning late teens and into the early thirties) on bicycles than I did 10 or 15 years ago. Especially those fixie bikes. Man, those things are selling like crazy.
Slim, I wonder if the trend toward biking goes hand in hand with the trend toward renting. You can’t carry much on a bike, but if you’re in a 2-bed flat, you don’t need to buy much, just food and toilet paper. It’s minimalist and low-cost.
Back in my day, if you wanted to date girls, you had to have your own car. Period. Preferably something “cool”, although you could get away with using mom/dad’s car, if it was something like a Cadillac, Benz, or BMW.
Anymore, it’s the girl who is hauling around the boyfriend, with a car financed by the Bank of Mom and Dad.
Part of it is that kids can’t make enough money on min wage to go out and buy their own car, pay for insurance, tags, etc. Part of it is that girls don’t want to have to depend on anyone, if they need to go someplace.
But, digressing, my daughters thought my weekend car was a giant POS (they called it “Joe Dirt”). That is, until I got it painted, picked them up at high school one afternoon, and they became instant celebrities at a one-car car show.
Now, they are fighting over who gets it, when I go take a dirt nap.
[Insert Joe Dirt quote about a Hemi here]
Good story…it’s funny that they didn’t know it would be popular with some people.
Back in my day, if you wanted to date girls, you had to have your own car. Period.
+1 I can totally relate!
How is the eurozone austerity plan working out these days?
Riots erupt in Spain protests
Spanish workers staged a general strike on Mar. 29 to protest against labor reforms which the government declared “unstoppable” but many ignored the action, fearing for their jobs in a country with the EU’s highest unemployment rate.
How is the class warfare battle between Wall Street Megabanks and Main Street households shaping up these days?
How can America’s Main Street families and communities best protect themselves against the rapacious ravages of Megabank, Inc?
WRITING ON THE WALL
Updated March 29, 2012, 12:04 a.m. ET
It Takes a Village to Battle a Bank
By DAVID WEIDNER
The movement to use local government funds as a battering ram against big banks has gained momentum since the start of the year. Some examples:
—On March 19, homeowners facing foreclosure petitioned Brockton, Mass., to move its money out of Bank of America Corp., (BAC +0.43%) J.P. Morgan Chase (JPM +0.63% & Co.), and other big banks that activists contend refuse to negotiate fair loan modifications. Banks have said those accusations are groundless.
—On Feb. 29, the Los Angeles City Council directed the city attorney to draft an ordinance that would gather foreclosure and small-business-lending data on banks that do business with the city.
—Last month, Kansas City, Mo., officials passed a resolution that directs the city manager to select banks that are responsive to the community’s needs and don’t engage in predatory lending.
—In New York City, legislation has been introduced that would require banks to submit a community reinvestment plan and progress reports that would be used by the city’s banking commission to rate banks that want to hold city deposits.
Similar actions are under way in Austin, Texas; Boston; Chicago; Minneapolis; San Jose, Calif., and Portland, Ore. San Francisco Supervisor John Avalos has stepped up his campaign to start a municipal bank, introducing a resolution last week.
Together, the actions suggest that even though Occupy movements across the U.S. dropped from the headlines like a pup tent whacked by a police baton, anti-big-bank activists are getting traction with some local politicians.
In contrast, Washington is compromised by big dollars thrown around by the bank lobby. Lobbyists for the banks spent $472 million in 2011, according to the Center for Responsive Politics, a research group.
Near the top of the list: Goldman Sachs Group Inc., (GS +0.32%) Bank of America, J.P. Morgan and their employees, according to the latest release by the Federal Election Commission.
At the local level, the game is a little more complicated for the banks. They can use traditional leverage to affect local policy: the promise of jobs, investment and philanthropy. But in the current wave of local antibank activism, there hasn’t been any public pushback or threats to close branches or offices. Perhaps it’s because those moves might be seen as a sort of blackmail.
Whatever the reason, banks are clearly on the defensive in local communities.
…
Last year, I went to the annual meeting of our local food co-op. Someone asked where the co-op banked, and ISTR that the answer was Wells Fargo.
That information was greeted by a chorus of boos. And one Arizona Slim was heard to say, “Move your money!”
I wasn’t able to attend this year’s meeting, so I don’t know if the co-op did move its money. But I sure hope so!
Together, the actions suggest that even though Occupy movements across the U.S. dropped from the headlines like a pup tent whacked by a police baton, anti-big-bank activists are getting traction with some local politicians….
Whatever the reason, banks are clearly on the defensive in local communities.
OWS was and is about ‘consciousness raising’ (as we used to say in the 60s), and it looks like they did a damn good job of it. They brought the actions- and existence- of the crony-capitalist 1% and their Wall Street enablers to the attention of Americans, in many cases for the first time. Now we’re starting to see the results of this new consciousness.
Did the stellar first quarter Wall Street rally disproportionately benefit the 1%?
March 30, 2012, 12:01 a.m. EDT
U.S. stock market’s rise leaves many behind
Index-based ETFs a factor in reduced trading volume
By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) — The U.S. stock market’s stellar performance in 2012 is remarkable in part for the anemic trading volumes that have accompanied Wall Street’s rise.
“After a decade or so of not really making any money in the marketplace, people give up,” said Bruce Norton, president of Whitebox Advisors.
Data suggest it has been primarily the retail investor that has remained on the sidelines as the S&P 500 (SPX +0.27%) marked the start of the bull market’s fourth year by targeting, and then overtaking, 1,400 — a level not hit since 2008.
…
“After a decade or so of not really making any money in the marketplace, people give up,” said Bruce Norton, president of Whitebox Advisors.
Gee, I can’t imagine why they’d be giving up. Could it be that “buy and hold” or “stocks for the long run” rhetoric wasn’t the road to retirement riches after all?
http://www.esquire.com/features/young-people-in-the-recession-0412#ixzz1qWgDYvmb
“If you follow the money rather than the blather, it’s clear that the American system is a bipartisan fusion of economic models broken down along generational lines: unaffordable Greek-style socialism for the old, virulently purified capitalism for the young. Both political parties have agreed to this arrangement: The Boomers and older will be taken care of. Everybody younger will be on their own.”
“Government, academia, the professions, corporations, unions, and both political parties — all continue to mine the vulnerability of youth in service of the needs of their aging power base. Separately, each of these cases would amount to a minor scandal, but taken together they point to a broader and more significant alteration to the way of the world. From every corner of the institutional spectrum, the whole of American society has been rearranged so that the limits of vision coincide exactly with the death of the Boomers.”
“Nobody wants this. The Boomers did not set out to screw over their kids. The wind just seemed to blow them that way. But no matter what their motivations, a painful truth grows truer with every passing year: Through its refusal to act, the generation in power is willing to do what other generations before them would not — sell their children’s birthright for a mess of their own pottage.”
Read the article. The data says this guy is right. So how much are younger generations going to be able to pay older generations for their houses (and stocks)? And how much are corporations and the Chinese going to be able to sell to them?
Ummm, excuse me, but I’m a part of that much-vilified Boomer generation. And I don’t really feel like my old age is going to be that wonderful.
As a freelancer, I get a snoot-ful of that virulently purified capitalism every day. I’m not seeing how the future will be much different.
I wonder where people get the idea that all boomers are rich and have fat pensions waiting for them?
It’s more like you got put out to pasture in your late 40’s to early fifties and now no one will hire you, your 401K took a beating and all that apreciation equity you were supposed to have in your house is gone.
It depends on who you are. But back in the day, big companies offered pensions. They stopped doing so and introduced the 401K in the early 1980s recession. In general if you were in, you stayed in, but if you were not, you got the 401K. The employer match was eliminated later.
As a back end of the baby boomer I was on the wrong end of that deal. But when I had an internship in grad school, it was paid at the equivalent of $39K in today’s money. The article confirms what I had expected: the market clearing entry level wage has fallen to zero.
The boomers saw improving living standards just about til 1980.
Yeppers. That was right around the time that I graduated from college.
Don’t worry about the elders - they’ll make sure that they get theirs.
That they have deliberately fixed it so that they themselves can be forgiven debt via bankruptcy and “victimhood” - and yet deny themselves for recent college graduates owing tens of thousands of dollars - should serve as the salve for anyone older than 60 as to whether they will get theirs.
They’ve proven willing to financially decimate their own progeny to serve themselves.
Next up: A complete gutting of Generation X. It is Generation X that will have to pay dearly - not just for elder social programs but for the Millennials burgeoning debt as well.
Boomers will enact laws that strip Xers of any wealth and old-age safety nets. This will be done to pay Millennial debt.
When the pendulum swings in favor of financial protection for the young (which is more than overdue) it is the Xers who’ll get reamed. Again.
Born between 1958 and 1975? It sucks to be you.
“Don’t worry about the elders - they’ll make sure that they get theirs.”
What happens when a young buck gets the ear of the x’ers. Are you sure the x’ers are going to just give in?
I’m thinking at some point you may see some price-gauging against Boomers, and, perhaps, rationing. Maybe even an attempt at an organized boomcott (don’t trust anyone over 60!).
They can take SS from my check, but they can’t make me volunteer at hospice. Who’s going to put their ham sandwich into a blender?
Who’s going to put their ham sandwich into a blender?
An illegal?
Isn’t that who generally does it today?
Here’s to hoping I can blend my own ham sandwich until I drop!
+1. Or if I can’t, it might be time to blend up some pills myself.
The one sad thing about the recent assisted-suicide case was that the old guy didn’t grind up the pills and put them in his yogurt himself. That way he wouldn’t have gotten someone else in trouble with his final choice. If the pills are too hard to crush by hand, I’m sure a cheap-o coffee grinder would work great.
Are you sure the x’ers are going to just give in?
I am positive they are going to give in, no matter how much they fight. Why? Because from a voting standpoint, there just aren’t enough of them. They are being outvoted now by the boomers and they will be outvoted later by the boomer’s kids.
The only consolation for X-ers is that they at least will have their choice of jobs when the boomers can’t “hang on” any longer and are forced to retire. That’s assuming that Millenials don’t leapfrog over the X-ers and give nepotism jobs to the Facebook friends.
Those of use born before 1965 are technically baby boomers. However, the 1960s generation was so loud and proud that those at the back end of the baby boom are generally not thought of. It’s as if I should have gone to Woodstock when I was eight years old.
Boomers will enact laws that strip Xers of any wealth and old-age safety nets. This will be done to pay Millennial debt.
Really? This may be true of early boomers (in their retirement years) With both parents working I see a lot of end of period boomers (50 year olds) that don’t even vote. There are only 1 or 2 friends of mine that even talk politics or Fed Reserve or anything that shows they want to take control of the flow of power. OTOH, the twenty somethings I run into are eager to talk about it. They have no problem discussing how screwed they feel, and I see them lighting the spark of change vs the relatively self absorbed 1960s boomers that right now are trying like mad to keep up appearances.
Possible weekend topic –
Historical evidence that the current “mortgage crisis” had numerous historical precedents.
Case in point:
Is the OWS movement pretty much dead in the water, now that they are broke?
Occupy Wall Street protesters back after arrests
Sat Mar 31, 2012 4:20AM GMT
Gary Anthony Ramsay, Press TV, New York
In New York, Friday started a weekend of activity for Occupy Wall Street demonstrators. After weeks of being blocked and arrested by police they tried a new way to get their voice heard.
It was casual Friday for the Occupy Wall Street movement as hundreds walked into the heart of the financial district, instead of marching.
Wearing clothes and carrying items so they could blend in with tourists who not blocked from getting close to the New York stock exchange.
Protestors set off what they call the people’s gong as the American financial markets came to a close.
Demonstrators from the 99 percent continue to find ways to exercise their first amendment rights amid a cloud police force, arrests and surveillance.
This demonstration comes as news broke this week of an expanded spying program by the New York Police department. Documents detail the NYPD’s spying of political groups some affiliated with Occupy Wall Street…a surprise for some but not for most.
Police were out in force but made no arrests during this practice run in trying new ways to disrupt the flow of business on Wall Street. A place that many here say is the source of much of America’s problems
Occupy Wall street protestors home all of this training with come through for them in a month when they hope to take part in a worldwide observance of May Day celebrations. When workers raise their voices against what they see as the in-quality of the international economic system.
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My understanding is that OWS protested because they had the skills and work ethic to do a job — if only there were job opportunities. Well, from what I saw, these folks didn’t dress, speak, or act as if they could or wanted to work, especially white collar work.
They should have treated OWS like a job or a job fair: show up at 8 am in working clothes, find some way to demonstrate their skills on a laptop and phone, and fade away at 6 pm, just like people with jobs. No sanitation issues, no makeshift libraries, no soup kitchens, no Burning-Man style camping out — nothing for the talk radio to attack. If OWS members want to be activist hippies, they can do it on evenings and weekends, just like people with jobs.
Now, I’m not repeating that they should get off their lazy bums and get a job. The point is that there aren’t as many jobs to get, and that should have been the focus, and the only focus, since Day 1.
I think the problem is that there were multiple groups within OWS, and of course the most annoying and unrealistic ones are the only ones who get on camera.
But I agree and have been saying since the beginning that they need to protest silently, clean shaven, in suits. It would have much more power.
Now that Douche Bank is avoiding American regulatory requirements, is there any prospect we can collectively shun the Megabanks out of existence? Why can’t the free people of the world collectively exercise their consumer power to shut down Megabank, Inc? Would the Fed rescue them if there were no demand whatever for their business?
If the Sherman Antitrust Act is now defunct, it’s time for vigilante action to keep Megabank, Inc’s systemic thieves away from our wallets.
Just say no to Megabank, Inc.
Deutsche Bank overhauls U.S. subsidiary in response to Dodd-Frank reform law
BERND KAMMERER/ASSOCIATED PRESS - Climbers abseil down the front of the Deutsche Bank headquarters in Frankfurt, Germany to unveil the new Logo of the “Deutsche Bank 24″ Tuesday August 31, 1999.
By Zachary A. Goldfarb, Published: March 21
Deutsche Bank, the German mega-bank, has overhauled its U.S. subsidiary to avoid having to put billions of dollars in new money in reserve as would be required by the Dodd-Frank financial regulatory reform law.
Deutsche Bank reported that it had taken the step in its annual report released this week. A document describing the plan said that “certain of the adverse consequences resulting from compliance with Dodd-Frank and other regulatory developments would be mitigated.”
A similar action was recently taken by Barclays Bank, the huge British-based firm. The action was first reported by the Wall Street Journal.
Big banks are often assemblages of smaller financial firms. For example, a big bank might consist of a traditional commercial bank that holds the deposits of retail customers, gives loans to businesses and does other services, plus an investment firm that engages in fancier forms of finance, such as trading.
It’s even more complicated with foreign banks, which have a U.S. subsidiary that may then be broken into further parts. Deutsche Bank’s U.S. subsidiary is named Taunus Corp., which has two main subsidiaries of its own: a commercial bank and an investment firm.
Taunus is one of the biggest financial institutions in the United States — with $354.7 billion in assets and 8,652 employees.
Dodd-Frank requires commercial banks to hold more capital than investment firms. Right now, Taunus’s commercial banks meet one capital requirement and its investment arm meets the other. Taunus isn’t required to meet an overall capital level.
But under Dodd-Frank, that would change in 2015, and Taunus would have to hold a lot more capital overall because it contained a commercial bank.
So in response, Deutsche Bank has now removed the commercial bank from Taunus, while keeping it within the overall auspices of the global Deutsche Bank structure. Regulators allowed the action.
As a result, Taunus won’t have to meet the higher capital requirements. Its investment subsidiary will still have to meet the capital requirements required by regulators under Dodd-Frank.
Likewise, the commercial bank will have to meet the capital requirements required by regulators under Dodd-Frank.
“In most cases, as long as deposit-taking commercial banks are regulated as such, it is not necessary to regulate their non-bank affiliates as if they were banks,” Robert C. Hockett, a Cornell law professor, said in an e-mail. “There are some exceptions, however, in which non-bank institutions expose even well regulated affiliated banks, or the financial system as a whole, to new risks.
William Black, a former bank regulator now at the University of Missouri, was more skeptical of Deutsche Bank’s actions.
“Of course, they’re trying to avoid regulation,” he said. “That’s the sole purpose of what they’re doing.”
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Believe me, there are whole careers dedicated to avoiding regulations. In sci-eng, it’s writing letters asking to be excused from this or that inspection or perusing accepted consensus standards to use the minimum thickness metal possible, and following the law to the exact letter and no more. In other areas, it’s engaging tax lawyers and buying politicians.
What’s the difference between a central bank and a hedge fund?
Fed’s Plosser criticizes unfettered asset-buying
Philadelphia Federal Reserve President Charles Plosser speaks at an Economics21 event in New York (Brendan McDermid Reuters, REUTERS / March 25, 2011)
4:50 a.m. PDT, March 26, 2012
PARIS (Reuters) - The world’s central banks should not have unfettered ability to purchase assets because that violates the traditional separation of monetary and fiscal policymaking and can allow governments to inflate away debts, a top Federal Reserve official said on Monday.
Instead, the Fed and other central banks should have clear limits on how much - and in what way - they can expand balance sheets, so as to avoid problems associated with the unprecedented policies adopted in the wake of the global financial crisis and recession, Philadelphia Fed President Charles Plosser said in prepared remarks.
The central bank has nearly $3 trillion in mostly long-term Treasuries and other securities on its balance sheet after two rounds of so-called quantitative easing since 2009. The European Central Bank’s balance sheet has swelled even larger, to more than 3 trillion euros ($3.98 trillion), as it also took steps to revive the euro zone economy.
“Granting vast amounts of discretion to our central banks in the expectation that they can cure our economic ills or substitute for our lack of fiscal discipline is a dangerous road to follow,” Plosser was set to tell a conference at the French central bank.
“Clear boundaries and resisting the use of the balance sheet as a new policy tool would also improve fiscal discipline by making it more difficult for the fiscal authorities to resort to the printing press as a solution to unsustainable budget policies,” he said.
Plosser, an outspoken policy hawk who opposed the Fed’s last round of bond-buying, has said repeatedly that the central bank should do no more to stimulate the U.S. economy, which has shown signs of strength in the last few months. Still, Chairman Ben Bernanke and other Fed policymakers have left the door open to another round of large-scale asset purchases if needed.
The Bank of England and others have recently ramped up such purchases, which are meant to drive longer-term interest rates lower, spurring investment and spending. Critics, however, worry that central banks will have difficulty offloading the securities when the time comes to tighten policy.
Plosser, who does not have a vote this year on the Fed’s policy-setting committee, also criticized the Fed’s purchases of mortgage-backed securities as blurring the lines between the U.S. government’s fiscal policy and the Fed’s monetary policy.
The committee’s statement in January that it wanted to return to an environment in which interest rates are the primary tool was a good first step to returning to more normal policymaking, Plosser said.
“I interpret this as saying that our balance sheet should not be viewed as a new independent instrument of monetary policy in normal times,” he said.
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I find it highly amusing how rich fools pay idiots a fortune to mismanage their money…
Stocks
Hedge Funds Pile Into Stocks After Missing Rally
By Devin Leonard on March 26, 2012
There’s a reason hedge fund managers are paid so handsomely. They are considered to be smarter than everybody else when it comes to investing. But that hasn’t been the case recently.
Last year was a terrible one for hedge fund managers, who were clobbered by market volatility. This year isn’t off to a promising start either. The U.S. stock market has been on an upward tear. Hedge funds have trailed S&P 500, however, since the rally began in October, according to Bloomberg News. ”These people have missed it again,” says Philip Orlando, chief equity strategist at Federated Investors. “They’ve been unduly bearish in their outlook. That’s certainly come back to hurt them.”
Now hedge funds are getting back into stocks. According to the International Strategy & Investment Group, the funds are still slightly bearish, but they’ve moved more aggressively into shares since the end of November.
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Completely off-topic here, but my SoCal niece just got a plum internship in Sunnyvale and needs a place to rent for the summer. She’s a homeowner, multi-degreed, 35 YO, not thrilled with the idea of Craigslist. Any suggestions?
This may sound odd, but is it feasible to rent at an extended stay hotel? Furnished, generally safe, and no worries about matching move-in move-out dates. A quick google search for a hypothetical May 20-Aug 30 turned up rooms at ~$1800-1900/month. Sounds expensive, but the turn-key aspect may be worth the extra expense.
Thanks, oxy. Will pass this on.
…not thrilled with the idea of Craigslist.
Must have seen Red State?
https://www.youtube.com/watch?v=uJ1v6oFHefc