Bits Bucket for May 20, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
April 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
What orifice hasn’t PE invaded?
Dental Abuse Seen Driven by Private Equity Investments
Isaac Gagnon stepped off the school bus sobbing last October and opened his mouth to show his mother where it hurt.
She saw steel crowns on two of the 4-year-old’s back teeth. A dentist’s statement in his backpack showed he had received two pulpotomies, or baby root canals, along with the crowns and 10 X-rays — all while he was at school. Isaac, who suffers from seizures from a brain injury in infancy, didn’t need the work, according to his mother, Stacey Gagnon.
Isaac’s case and others like it are under scrutiny by federal lawmakers and state regulators trying to determine whether a popular business model fueled by Wall Street money is soaking taxpayers and having a malign influence on dentistry.
http://www.bloomberg.com/news/2012-05-17/dental-abuse-seen-driven-by-private-equity-investments.html
Performing non-emergency medical care on children without their parent’s permission is assault.
Maybe she signed a release without reading it.
Then she has no one to blame but herself and the information that the program is being reviewed is all that can be done. I know a friend whose kid got taken to the dentist in school - or at least he did in kindergarden. She didn’t have an issue with it - none of them had been to the dentist since before he was born. But I don’t recall that any work other than a quick check and a cleaning was done.
Ca has vaccine enforcement stuff going on that could overstep parental rights. The bill is floating around Sacramento. I am child-free, so I didn’t dig into the whole controversy. Scary.
If I understand you correctly, that stuff has been going on for years. I wanted my children to go to one of those “chicken pox” parties where a Mom would let others in the neighborhood know to come over and expose your child so they didn’t have to get the innoculation. The innoculation was known to kind of peter out in protection in adulthood while the actual virus would give you full protection for life. Alas, the timing came down to the fact that if my kids weren’t innoculated they weren’t going to MA state schools. I put off those innoculations as long as I possibly could w/o letting it prevent that first week of Sept start date.
If you actually get chicken pox you have an approximately 20% chance of getting shingles in your 50s or later. The vaccine prevents that. Shingles can be horrendously painful.
Also, my brother had a very mild case of chicken pox and got it again because he didn’t have enough immunity from the first time.
CarrieAnn
IIRC, if was about the school determining health care actions, and the parents would not have to be informed. That’s just wrong. Vaccine Nazis. This is the land of nuts and fruits. (The fruits are fine, but can we ship out the nuts?)
You sound like a great mom. I am an Aunt to 42.
“Isaac’s case and others like it are under scrutiny by federal lawmakers and state regulators trying to determine whether a popular business model fueled by Wall Street money is soaking taxpayers and having a malign influence on dentistry.”
There goes the government interfering in the free market again!
/snark
Life is still fun at JP Morgan. This is the whole blog post, but here is the link if you want to read the comments:
http://krugman.blogs.nytimes.com/2012/05/19/no-systemic-issues-here/
Please read the whole thing. It builds, as opposed to revealing all in the first sentences.
No Systemic Issues Here
No way, no how:
The unit at the centre of JPMorgan Chase’s $2bn trading loss has built up positions totalling more than $100bn in asset-backed securities and structured products – the complex, risky bonds at the centre of the financial crisis in 2008.
These holdings are in addition to those in credit derivatives which led to the losses and have mired the bank in regulatory investigations and criticism.
The unit, the chief investment office (CIO), has been the biggest buyer of European mortgage-backed bonds and other complex debt securities such as collateralised loan obligations in all markets for three years, more than a dozen senior traders and credit experts have told the Financial Times.
Among other things, it appears to have taken more than half of the residential mortgage-backed securities issued in Britain over the past three years.
But of course, the fact that these risks are being taken by a too-big-to-fail institution, whose failure would cause a global crisis, which would therefore inevitably be bailed out if it got in big trouble, and which benefits from taxpayer-backed deposit insurance, is no cause for concern. None at all.
Naked swimmers. I’ll bet there are a lot of them out there; We shall see.
I find it is easy to understand how these financial guys make a lot of bucks in financial expansions but I really have to question how they do it in a financial contractions.
It appears that they don’t. What a surprise!
Why is this branch of our government shoring up the British housing market?
Because we are stupid.
Because the concept of TBTF rules.
Because the successes of the TBTFs are kept in house while the failures are shipped out for somebody else to eat.
Because we won’t publicly finance our elections.
“…how they do it in a financial contractions.”
I believe the political window for Megabank, Inc to make lots of money in financial contractions is slamming shut.
10:14 AM EDT, Sunday May 20, 2012
Boehner On JP Morgan: ‘No Law Against Stupidity’
House Speaker John Boehner said in an interview taped to air Sunday on ABC’s “This Week” that new regulations would not have prevented a trading debacle by Wall Street giant JP Morgan in which the investment bank lost at least $2 billion dollars.
“There’s no law against stupidity. No law against stupid trades,” Boehner said.
“And as long as the positives, money wasn’t at risk, and as long as there’s no risk of a taxpayer bailout– they should be held accountable by the market and their shareholders.” Boehner added. “And they are.”
“I don’t believe there’s anything in Dodd-Frank- that would’ve prevented this activity at JP Morgan,” Boehner said.
…
I personally view the questions being raised about which law would or wouldn’t have prevented the JPM loss to be a strawman diversion from the real question: How well would Dodd-Frank, Glass-Steagall, the Volcker Rule or any other potential regulation protect the U.S. taxpayer against systemically risky banks making gambles which would require future bailouts if they go sour?
For the record, I don’t give a flying fork if JPM, Goldman Sachs or any other Wall Street Megabank gambles themselves to the point of ruin, just so long as the losses land squarely on their shareholders.
…as long as there’s no risk of a taxpayer bailout…
Didn’t Obama say, “Never Again?”
They do it in financial contractions by being the least leveraged during the upturn, so they can fill the void more easily during recovery.
They make less on the way up between “normal” and “frothy”, lose less from “frothy” to “absolutely terrible”, and make a ton more between “absolutely terrible” and “normal”.
Why should Main Street America have to worry so much about JP Morgan’s gambling losses?
Could Glass-Steagall Have Stopped JPMorgan Loss?
by NPR Staff
All Things Considered
[14 min 47 sec]
JPMorgan, the largest bank in the United States, is seeking to minimize the damage caused by a $2 billion trading loss, disclosed earlier this month.
Enlarge Mark Lennihan/AP
May 19, 2012
Following JP Morgan’s disclosure of a $2 billion loss, a small but increasingly vocal group of lawmakers and economists are arguing that a 60-year-old piece if financial legislation should never have been repealed in 1999.
They say the law, known as the Glass-Steagall Act, was so consequential that there’s a direct link between its repeal and both the 2008 financial meltdown and JPMorgan’s huge loss.
Congress passed the Glass-Steagall Act in 1933, in the midst of the Great Depression. The original intent was to prevent the kind of speculation and bank runs that led to the catastrophic stock market crash in 1929. But by 1999, the overwhelming consensus on Capitol Hill was that it was time for a change.
Then-President Bill Clinton and his treasury secretary, Larry Summers, urged Congress to ease the regulations that separated commercial and investment banks.
“If we don’t pass this bill, we could find London or Frankfurt or, years down the road, Shanghai becoming the financial capital of the world,” Sen. Chuck Schumer of New York said on the Senate floor.
Just eight senators voted against the repeal, including Democrat Byron Dorgan of Nebraska. The former senator tells weekends on All Things Considered host Guy Raz that at the time, he warned that repealing the law would fuel consolidation on Wall Street and raise the likelihood of taxpayer-funded bailouts.
“I was very concerned about what this was going to mean for the future of the country,” he says.
Democrat Elizabeth Warren, who is running for U.S. Senate in Massachusetts, says she wants to bring Glass-Steagall back. She tells Raz that banks that offer commercial services — checking, savings and deposit accounts — should not be in the business of making financial bets that can result in massive losses — like at JPMorgan. That should be left to the Wall Street trading firms, she says.
“Glass-Steagall says there needs to be a wall between those two kinds of activities,” Warren says. “It’s not going to work to let the biggest financial institutions just go out and do what they want.”
The Volcker Rule, part of the Dodd-Frank Act passed two years ago, is meant to keep those risky activities in check by having federal regulators watch the big banks. But Warren says that’s not enough.
“If that’s not working, if we don’t have regulators who are able to be strong enough [and] write tough enough rules to keep that distinction in place, the Volcker Rule won’t be able to do its job,” she says.
What Happened To Dodd-Frank?
…
I wonder If re-instituting glass steagall would force a bunch of the TBTF banks to unwind existing transactions from which they could not recover.
“The unit at the centre of JPMorgan Chase’s $2bn trading loss has built up positions totalling more than $100bn in asset-backed securities and structured products – the complex, risky bonds at the centre of the financial crisis in 2008.”
Sounds like JPMorgan Chase is banking pretty heavily on bailouts unlimited?
To expect a company not to take advantage of government guarantees and too-big-to-fail is a failure of understanding of these businesses.
TBTF is basically a taxing ability.
I walked around a community garage sale yesterday (20 odd houses in a walkable area all putting stuff out on the same day). First of all, I decided that community yard sales are a waste of time. Eveyone has to do it on the day designated so most places don’t have that much stuff to put out. They are just doing it because there will be people coming around, not because they are moving or combining households or actually doing something that would cause them to get rid of something you might want. I bought one book and 2 children’s puzzles for a total outlay of $2.
The most interesting thing was the chat I had with the woman selling some clothes at the last house I visited. I think I have mentioned before that along Wisconsin Avenue in Chevy Chase (heading to Bethesda) there were two empty lots that just looked too small for houses to be put on them to me. They were well used as Christmas tree sales lots in December, but I couldn’t figure out what else they could be used for. Well, one was sold to a developer. It is putting up a spec house.
You want to guess what the lot sold for?
No, higher.
Higer than that.
OK, I’ll tell you.
$525,000. For a miniscule empty lot.
They are putting up a 4000 square foot box. It will have a detatched garage and because of the street it faces, they have to have a real drive way (or the person would never be able to merge into trafic). Looks to me like they are filling close to 90% of the lot with house, garage or driveway. I have no idea how they got that permitted. The woman told me that the rumor was they had to sell it for over $1.4M to make a profit. I told her that may be what they want to get but that it doesn’t cost close to a million bucks to build even that big a house even in our area. Where upon she volunteered that the construction foreman told her that while they did a good job with the basement/foundation (poured concrete - probably required since I think the gas and water lines go right along Wisconsin), the rest of it was very badly built. I couldn’t see everything as there was already insulation up, but I couldn’t see anything bigger than a 2 by 4 anywhere.
Her house is 1400 square feet with a detatched single car garage (no real driveway, just a double rut to the garage, looks like it might have had gravel a while ago). Probably a 3/2 but could be a 3/1. Needs new paint very, very badly. She is a little upset about the trees that came down as she says it makes her deck too sunny and therefore useless. The house across the street sold for about $800K a little while ago, but she said it was in terrible condition. Most on the street (ones with real lots and larger than hers, but smaller than the spec house) sell for around $1.2 million. She was terribly jealous when I told her that my landlord recently took down the screens and washed the oustside windows and replaced the AC air filters.
Northern va?
Which part of NoVa has a Wisconsin Avenue going through Chevy Chase headed to Bethesda?
The Maryland part.
Hello everyone. For a long time I was not able to post. I am not sure why, but I am back. I see we do have the Romney/Obama race that I actually predicted when Obama won in 2008 and I am not happy about that but so be it.
As far as housing, I think QEIII is quite close and the PTB will continue to drive up rent prices to put a floor under housing prices. I don’t see a big move either way in housing prices.
Reply to this comment
You probably got banned, like a poster did yesterday for personal attacks that just got to be too much. I don’t keep track of these things, but keep it civil and you can post here.
I notice both Oxide and FPSS are MIA this weekend. I assume Oxide decided to not expose herself to further demoralizing personal attacks.
No, I went on a trip. And I didn’t bring my computer.
Glad to have you back. And my apologies if anything I recently said about your decision to buy a home came across as a personal attack.
For the record, I advocate the approach you took to the buy-or-rent decision, which was to consider your personal circumstances and exercise independent judgment. If everyone in America acted similarly, we could go a long way towards buffering our economy against future economic crises.
Thank you, p-bear!
I’m guessing that you made a similar calculation at some point and chose to continue renting. In California, anything goes. I was just worried about what to do at retirement, when I didn’t want to think what the rents would be. However, there is always the Oil City-ish plan. For a lifelong, renter, it may be better to buy than rent during retirement. For houses at sub $100K, PITI is far less than most rents.
I never had a problem with folks renting, just with posts that made blanket statements about MY situation, without posting any support whatsoever. Oh well, whatever happens, I’m stuck now.
BTW, oxy, I get a smile from your new handle… Way to embrace the hyperbole.
“For a lifelong renter, it may be better to buy than rent during retirement.”
It might make more sense for us to own at the point when our kids are all gone from the nest. We are talking nearly another decade here…
Whoa! Who was that?
The regrettable thing is that some of the more egregious personal-attackers stimulate the most lively discussions– and provide the most satisfying denouements when they’re shot down. But a little bit of civility goes a long way.
Post as though your name were on your screeds. Like Ben does.
At some point, contumely trumps insight.
Prolly me.
I’m FED up with the invocation of political buzzwords because I know damn well the offices are bought and paid for……. every last one of them.
For those who don’t understand, it’s the same kind of reaction provoked when you all hear “housing prices always go up”.
It’s BS.
Weren’t you the poster who told us that QEIII was in the bag for April….of 2011?
There have already been lots of MSM QE3 announcements for a long time…gotta keep the QE3 cargo cult’s hopes up.
“QEIII is quite close”
Or at least something along those lines from high up in the international financial system…I assume that unless they are talking about changing the rules of the game to foster better conditions for economic growth, the “pro-growth” G8 leaders are planning for some kind of further near-term Keynesian (fiscal or monetary) stimulus?
I’ve been trying to imagine why any politician would stand in the way of “economic growth” at this point.
EUROPE NEWS
Updated May 19, 2012, 8:38 p.m. ET
At Summit, a Struggle for Consensus on Economic Woes
By CAROL E. LEE, SUDEEP REDDY and STEPHEN FIDLER
CAMP DAVID, Md. — Leaders of the Group of Eight major economies ended a weekend summit in which they struggled with little success to find agreement on next steps to calm the euro zone debt crisis, which poses a threat to the fragile U.S. recovery.
Among world leaders, consensus seemed to come more easily on ways to cushion the world from an Iranian oil embargo and other issues involving global security.
Meeting at the presidential retreat here, the G-8 leaders agreed that the euro-zone turmoil posed a critical threat to the global economy. But there were distinct signs of differences on the crucial question of how to resolve them.
In a joint statement Saturday, the G-8 leaders said they would take steps to boost their economies, while “recognizing that the right measures are not the same for each of us.”
For U.S. President Barack Obama, who can do little more than nudge European leaders toward a solution, an economic crisis in Europe that spreads to the U.S. could be a devastating blow to his re-election campaign.
Nonetheless, Mr. Obama and leaders who favor a greater emphasis on policies that quickly produce jobs and growth over fiscal austerity portrayed the summit as a step forward, because their arguments gained greater stature.
“The direction the debate has taken lately should give us confidence,” Mr. Obama said in a statement to reporters at the close of the summit. “There’s now an emerging consensus that more must be done to promote growth and job creation right now in the context of these fiscal and structural reforms. That consensus for progress was strengthened at Camp David.”
The new French president, François Hollande took satisfaction in the fact that the role of growth had been expanded in the economic discussion.
“In the name of France, I wanted to put growth at the heart of the debates, and make sure that growth, as well as budgetary discipline, could find its place in all meetings, at the G-8, at the European council, and at the G-20,” Mr. Hollande told reporters at a press conference at Camp David.
…
MSM starts pumping QE3 talk and the markets go up.
Markets have been down for more than a week, Nasdaq down 11%, time to ramp up the QE3 talk - again.
Get people back in the market with faults expectations.
The Fed either has to keep the QE3 cargo cult dancing, or else watch all the marbles go KerPLUNK!
In QE3 waltz, Fed again steps toward easing
By Pedro da Costa
May 17, 2012
On again, off again. That’s been the story with prospects for another round of monetary stimulus from the Federal Reserve. Expectations for a third installment of quantitative easing, the much-debated QE3, had ebbed with improving economic data in the first quarter – but are now flowing anew.
Following a weak employment report for last month, the latest hint that more bond buys could be in the offing came from minutes of the central bank’s April meeting, which saw the Fed leave rates near zero and repeat that it would likely hold them there until at least late 2014. Policymakers appeared to be taking an increasingly dim view of economic prospects given an array of looming threats to growth, even if none are particularly new.
…
Here is an easy armchair prediction for the U.S. headline stock market indexes:
They will continue to gyrate down right up to the point where a critical mass of FOMC members can’t take it any longer, at which point there will be a QE3 announcement and a stock market rally will commence.
Seems like a no-brainer, aside from the question of how far they will let those indexes drop before stepping in…
One more point: No matter what the FOMC does between now and November, the decision to act or not to prop up the stock market clearly has implications for the election outcome. No more stimulus could be construed as an FOMC vote for Romney; yes more stimulus, a vote for Obama.
Such is the natural consequence of Fed independence run amok.
Fed independence run amok.
But if they were less independent of the government, more controlled by them, would that be better?
I don’t want government control of the Fed, aside from a clear set of rules (a charter?) explaining their latitude for policy discretion. For instance, is it legal for the Fed to use dollars to prop up foreign governments?
That’s what I expect too. A buy the dip moment?
The tricky thing about “buy the dip” is to figure out how far the Fed will let the market drop before invoking the Bernanke put. I suppose anyone who could figure that out could make billions of dollars timing the market.
I suppose anyone who could figure that out could make billions of dollars timing the market.
Or anyone who had that inside information.
That reminds me of the scumbag Fed boardmember who bought tons of GS when he knew the fix was in. And went completely unpunished.
Even better than merely trading on insider information is doing so subject to impunity.
Even better than merely trading on insider information is doing so subject to impunity.
Sorta like globe trotting predator Strauss-Kahn with his diplomatic immunity card?
“faults expectations”
That works too.
Grexit prisoner’s dilemma for Eurozone nations noted:
THE NUMBERS GUY
Updated May 20, 2012, 3:13 a.m. ET
Cost of Losing Athens Can’t Be Calculated
By CARL BIALIK
As Greece girds for elections next month that could lead to its exit from the euro zone, economists are acknowledging an unsettling reality: No one knows what the bill will be.
A wide range of potential price tags has been reported, anywhere from €150 billion to €1 trillion euros ($1.27 trillion). But none of these are comprehensive, nor are they meant to be—they don’t, for instance, weigh the cost of an exit against the cost of avoiding one. By comparison, the 2008 Troubled Asset Relief Program, known as TARP, was a $700 billion program initiated in response to the U.S. financial crisis.
The amounts could vary sharply depending on how Greece walks away, with each scenario introducing its own set of uncertainties. There is no real precedent for economists to analyze, as prior defaults or devaluations are very different. And any signals from investors are ambiguous: It’s impossible to isolate Greece’s contribution to stock-market gyrations this week from other factors.
Any number “for the costs would involve a huge amount of error,” says Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning Washington, D.C., think tank. “There is such a wide range of uncertainty around the exact course of events.” More important, he adds, a Greek exit from the euro would spur policies in response, from the European Union and from member states. Predicting those is more a matter of politics than economics.
“It goes beyond our rationality and touches on our behavioral and psychological aspects,” says Constantin Gurdgiev, professor of finance at Trinity College, Dublin.
The most straightforward cost calculations are narrow, focused on impacts to lenders to Greece if the country defaults on much or all of its debt. That kind of cost appears to be what departing French finance minister François Baroin had in mind when he said this week a Greek exit would cost France €50 billion. Mr. Baroin is leaving his post as Socialist François Hollande brings in a new French government.
Eric Dor, director of research at the IESEG School of Management in Lille, France, puts potential losses to France at €66.4 billion, and to Germany at €89.8 billion—calling those upper bounds, since Greece could pay back some of that debt, albeit with a new currency widely expected to plummet relative to the euro right after it is introduced.
Those are just the direct costs, Dr. Dor says. “There would be a lot of indirect costs because the event could trigger an even deeper recession in Europe, lowering tax receipts.”
…
From yesterday:
Comment by BetterRenter 2012-05-19 07:54:47
“The Army turned over some information but said it did not have any specifications or designs for the drip pans that might explain the price. That was considered proprietary information held by Phoenix Products.”
Well, that’s the end of the Republic, folks. The government is protecting the guys who are raping it.
——————
Not even close. There are seven exceptions to the FOIA law, one of which is intellectual property/competitive advantage. If the Army had released the design of that drip pan with the FOIA request, then anyone could make the pan, and Phoenix would have lost its IP and competitive advantage. Phoenix — and every other bidder — was entirely in its rights, under the FOIA law, to request that the information be witheld. The Army probably released a redacted version.
So yes, the Army was “protecting” the free enterprise and business practices that you all so claim to love. By the way, the government acquisitions officers are not obligated to decide which pan to buy based on lowest price. They decide based on “best value,” which is something else entirely.
There was no competative bidding. It was an earmark. The Rep for the company’s district told them who to by the pan from.
Ah, got it. But in my civilian section of government, a caper like this would have gotten a lot of people in serious trouble. But wouldn’t the IP still be protected from FOIA? It sounds more like a matter for internal review, where all the plans can remain non-public.
Our FOIA requests don’t involve technology disclosures (though we sometimes bump into technology and IP issues). I’m not familiar with that rule. It sounds likely. What would have been discoverable were the original specifications for the bid process. I think those get generated even when the contract is ultimately not put through the bid process. Someone should be able to find something about the “technology” of the drip pan.
Robin Gibb died today. Even though I am primarily a rock fan, I always liked the Brothers Gibb. Robin was an extremely gifted singer and song writer.
Rest in Peace brother.
Requiem æternam dona eis, Domine,
et lux perpetua luceat eis.
Rest in Peace brother.
Robin Gibb of the Bee Gees dead at 62
http://www.youtube.com/watch?v=v1Yy7ipENM8