Bits Bucket for May 28, 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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Stumbled upon the “inflationdata” website while searching on “deflationary crash” Robert Prechter is asked,
“Should you invest in real estate?”
“Short Answer: NO”
“Long Answer: The worst thing about real estate is its lack of liquidity during a bear market. At least in the stock market, when your stock is down 60 percent and you realize you’ve made a horrendous mistake, you can call your broker and get out (unless you’re a mutual fund, insurance company or other institution with millions of shares, in which case, you’re stuck). With real estate, you can’t pick up the phone and sell. You need to find a buyer for your house in order to sell it. In a depression, buyers just go away. Mom and Pop move in with the kids, or the kids move in with Mom and Pop. People start living in their offices or moving their offices into their living quarters. Businesses close down. In time, there is a massive glut of real estate.”
Yes that’s obvious and I am very appreciative of how liquid stocks are. I take advantage of that. Had BAC stock. It went south and I dumped it for a huge loss. I win some and lose some. For now I made a big hit in my staffing company stock that makes up for all my losses since I started buying individual stocks back in 2000. It’s partially luck but it’s also taking advantage of this high unemployment situation. Staffing companies do well when clients need help but are shy of paying benefits for permanent employees. Staffing companies also do well when unemployment starts to come down.
My stock might go into the dumpster in 2013 though because I think unemployment is going to go up by 40% or 50% from its current levels. I think we will see a permanent official double digit unemployment rate in the U.S. for the next ten years starting in 2013 and unofficial 25% rate.
I think we may have to re-institute the draft/ peace corp/ vista to keep those people from rioting, and would that be a bad thing?
Keep them employed fixing up their bombed out communities. Or put them in AZ keeping the Illegals out…
As a side not my brother who does commercial HVAC got rehired by the same company, same bosses, same BS, at 25% less, why ?? Because that’s all they bid on this building to get the job. A sign to come, each job has its own pay scale?
“Keep them employed”
Sounds suspiciously like government spending to me. Don’t you know it’s the job of private business to create jobs? (given the proper tax incentives, of course.)
I figure we are throwing tons of money down the rat hole anyway on Clintons back to work failure programs, welfare, food stamps Jails, medicaid Wic…so whats wrong with getting something in return? This is where my English classes start to make sense.
“…(given the proper tax incentives, of course.)”
…and federal R&D and contracts.
Did they teach you how to use possessives and contractions?
Apparently not -
Hi Robin…I worked in tv stations, news so flowing prose is not good for ratings…try NPR where putting your fine English skills to work will be most appreciated.
Thats why I use the ….. its meant as a pause…
“With real estate, you can’t pick up the phone and sell. You need to find a buyer for your house in order to sell it. In a depression, buyers just go away.”
I’m not buying it. The reason the buyers go away is that sellers don’t know the market price, and list their homes too high for any rational buyer to want to make an offer.
The only buyers in the game now are the ones who have been handed other people’s money on easy (e.g. low-downpayment), government-guaranteed terms. And these folks are making sure the few sales transactions that are taking place are at above market value.
What’s not to buy?
You’re objecting to the phrasing of his statement not to the facts thereof.
All illiquid markets work the same way. Whatever the reason, the spread between buyers and sellers is so wide that no transactions take place.
Real estate just happens to be a particular case.
However, he’s right as long as you generalize it and get the gist.
What I found lacking in Prechter’s explanation was any mention of the role of stubborn sellers who won’t lower their prices to realistic levels, given current market conditions. It’s not just about the buyers going away.
It’s worth adding that one of the (presumably) unintended consequences of many recent government-sponsored efforts to prop up housing prices was to drive an even wider spread between buyers and sellers than would otherwise have occurred during the post-bubble correction. Hence current housing market liquidity is even more dessicated than it would have been sans intervention.
Frankly, I just don’t think he cares about the details as much as you do.
In any case, the facts are fairly clear now (unlike before the boom.)
Why belabor them?
Waste of precious time, money and effort.
The reason the buyers go away is that sellers don’t know the market price, and list their homes too high for any rational buyer to want to make an offer.
The folks who own outright don’t have to sell. It’s the borrowers who can’t keep up with the current payments that need to sell; they just need some sucker (government?) to bring the difference to the closing table. Time to man-up, bear, and cash out that retirement fund to help the losers. You’re going to heaven away, IIRC, so what difference does it make? Think of the children!!
Speaking of a real estate glut, it appears that we have brand new one right here in Tucson. It’s a glut of student housing. Not that the growing evidence of said bubble is stopping developers from building, building, and building.
Here’s a story from our leading local fishwrap:
New developments with top-flight amenities expected to draw students nearer to UA
Money quote: In 2009, an estimated 18,253 of 38,057 students lived in housing other than on-campus housing, fraternity housing, 40-plus unit private student housing and 5-39 unit private student housing, the 2009 university market study showed.
Those students aren’t knocking down doors, however, to live in smaller units within walking distance of campus, even at rock-bottom prices, said Jim Hostetler, who leases about 40 apartment units in the UA area for a maximum of $670 for two bedrooms.
“I don’t know if I’ve ever seen it so bad,” said the 40-year veteran of the leasing business. “There’s way more supply than demand.”
Well, I’ll tell you a short story about the University of South Florida here in Tampa. First, there is no such thing as “student housing”.
Many developers and small time investors had put up small apartments and duplexes/triplexes near the University under the concept of renting to students who they considered to be a responsible source of monthly income.
What happened?
Initially, students rented the units. When times got slow, like now, the owners needed income, so they allowed SECTION 8 welfare recipients to rent them. Next, crime levels increased. The demographic changed from primarily white middle-class and working class students to primarily black low or No income welfare cases.
Soon, thereafter, the area became known as “suitcase city” because it became a transient region and drugs and hookers lived throughout the area.
Shortly after that, we had moves for FEDERAL Community REinvestment money to repair and replaced the dilapidated rental units.
It is still a ghetto and the Students usually commute a greater distance to find a less crime infested area or live on campus, where the campus police can keep out the drug dealers.
I am sure this has happened to a neighborhood like yours somewhere in your town if you have “section 8″ housing.
Recently, Tampa rebuilt ALL the “public housing” and has put in greater controls on the tenants. the units are made like Condominium communities and maintained by the taxpayers.
the folks in the government/entitlement complex call this “fairness in housing”, however, no one is paying for mine, and never has. Instead, I get a tax bill every year to help pay for theirs. Gee, that’s “Fair”.
Initially, students rented the units. When times got slow, like now, the owners needed income, so they allowed SECTION 8 welfare recipients to rent them. Next, crime levels increased. The demographic changed from primarily white middle-class and working class students to primarily black low or No income welfare cases.
One of the student complexes mentioned in the article I linked to is called NorthPointe.
Well, wouldn’t you know it, a friend’s son used to manage a nearby complex. Friend’s son referred to that place as KnifePointe. Something about all the crime over there.
Friend’s son’s complex picked up quite a few KnifePointe refugees as tenants.
“I don’t know if I’ve ever seen it so bad,” said the 40-year veteran of the leasing business. “There’s way more supply than demand.”
At CalPoly SLO, the off-campus housing costs ballooned with the bubble, so the campus built lots of new student housing, which I understand is fairly desirable in both standard of living and monthly cost. I’m sure the corporate student housing folks hate competing with state government.
Yesterday’s trip down memory lane reminded me of this fluff piece by the St. Pete Times:
“Underwater and staying: Even more than money, it’s about home”
http://www.tampabay.com/news/business/personalfinance/underwater-and-staying-even-more-than-money-its-about-a-home/1056509
They recently did a short sale for $110k. LOL
Doesn’t this end Dec 31 this year? Ill bet there will be a massive jam up of sellers trying to make it under the wire. And banks will stall and stall and stall.
—Changes to the law mean I wouldn’t even owe taxes on the essentially forgiven debt.
“Doesn’t this end Dec 31 this year? ”
Great question, I don’t know the answer.
It’s clear to me GSEs will choke the inventory until after the elections. I think the best anyone can do right now is get cash and avoid commitment/debt.
Doesn’t this end Dec 31 this year? Ill
Yes, it does. This is from the IRS’ site; emphasis mine:
http://www.irs.gov/individuals/article/0,,id=179414,00.html
The Mortgage Forgiveness Debt Relief Act and Debt Cancellation
If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable.
The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.
“Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately).”
2 mil… lovely.
“the bank appraised the house for $13,000 more than we paid. We had instant equity.”
What about the down payment? Isn’t that instant equity? Oh wait, maybe they didn’t pony up a down payment?
“My home isn’t likely to recover its value for nearly 20 years. I could save $400, even $600 a month renting a home just as adorable not far from mine. ”
Those are two huge red flags. They bought too soon in an area which was far too bubble. The rent/buy equation favored renting. Walk from the house? They should have walked from the closing table.
How do you know they did a short sale, Muggy? And why? Did they lose a job?
I looked their names up on public records for the SS. I don’t any of the other details…
“the bank appraised the house for $13,000 more than we paid. We had instant equity.”
I’m reading a book full of stories from the Darwin Awards. The above quote reminds me of some of the winners, er, losers, who have done various stupid things to remove themselves from the human gene pool.
How do you know they did a short sale, Muggy? And why? Did they lose a job?
It would be really interesting to know, wouldn’t it?
I think I’ll send her an email and ask; googling her suggests that she will works for the Tampa Bay Times, as well as PolitiFact.
So she still has her job. I wonder about her husband. If they can make the mortgage payment, I don’t see why a bank would allow a short sale. The bank would force them to keep paying…
So she still has her job. I wonder about her husband. If they can make the mortgage payment, I don’t see why a bank would allow a short sale. The bank would force them to keep paying…
Banks approve short sales for plenty of people who are capable of paying. The decision for the bank is to determine which route of disposition will cost them the least money; if the FB is able and willing to stop paying, then the short-sale is typically the lowest-loss option for the bank.
I have been trying to show people who read this block that the Sacramento market is recovering from the bubble bust. Read this e-mail from a friend of mine, who immigrated here from S. Korea:
As soon as we got to have quiet time, we again had another busy job in here. I mean we have started to look for houses to purchase since early April. It was not that bad then. I mean in early April there were not many houses available but several ones to look around. But it is getting fewer ones to buy. We made offers over 10 times with a lot over asking price sometimes and only one we got out of ten. I can say this is like “a war”. And also the price is rising up rapidly. Low inventory, low interest rate and the people’s recognition that this is the right timing to buy…. no more decline of price and so on…. What is your prospect about this market? Is it going to continue or be temporary? I heard banks still hold a lot of REOs. Am I right? If so, why are there few houses in the real market? Why do they hold them instead of disposal? I am very curious about it. Everyday I research Zillow.com, Sacbee, newspaper and there are so many things
“I heard banks still hold a lot of REOs. ”
Tell him to wait until he hears that banks don’t have a lot of REOs.
‘Why do they hold them instead of disposal?’
‘We made offers over 10 times with a lot over asking price’
Answered your own question.
ED ZACHARY!
Tell him to wait until he hears that banks don’t have a lot of REOs.
The recent data show that the REO being held by the GSEs is trending down… Wish the data for private banks were available (or maybe it is, and I just don’t know where to find it…).
South Koreans and other immigrant buyers = govt inventory manipulation bagholders…
Precisely.
From yesterday;
Comment by jinglemale
2012-05-27 12:19:19
The F/F mandate is to promote home ownership…..not landlord/tenant property ownership. It makes good sense to me! ??
Really ? You making up your own facts here ??
Then why do they lend to anyone who is not a owner occupant ?? 20% down for non-owner occupant buyers…60% LTV for any cash out for the same….Vs….minimum down for a owner occupant…So who is the better risk ?? And why, would you limit them to four loans ??
Want to make the charter that no loans are made unless its an owner occupant…Fine by me…It would bring down the cost of housing…But, remember, that would include YOU if you choose to move out of your house and buy another…If you have ONE loan with any government agency thats all you get…Lets do it…
I’m not makiing this up. Really, you can get four loans from F/F. I know because my wife and I each have four. That’s the limit. After that it becomes an exception.
jinglemale, how much higher were the rates on the non-owner-occupied loans relative to the owner-occupied loan?
Thanks much for the info…
.125 to .25%. Depends on where the pricing falls that day.
Here’s a related subject to think about on Memorial Day:
‘Last Wednesday U.S. District Judge Katherine Forrest ruled that Section 1021 in the latest National Defense Authorization Act (NDAA), allowing military detention of American citizens without due process, is unconstitutional…But we’re not out of the woods yet: the administration could appeal the ruling, and it could go all the way to the Supreme Court, which, given the number of gung-ho Bush appointees on board, could be disastrous.’
‘Here’s what’s at stake: last week, a database compiled by two university law schools established that, since 1989, over 2,000 convicts had been exonerated for crimes they did not commit. The average term of imprisonment for these innocent victims: 11 years. That’s a lot of wasted life and a lot of mistakes by our judicial system, with all of its constitutional protections.’
‘But now the Pentagon is going to decide some of these criminal cases with no trial and ensure that many innocent people are not caught in the dragnet? And not abused Abu Ghraib–style? How do you prove your innocence from a dungeon? Without providing lawyers or any due process at all, the DOD is going to do a better job than our imperfect judicial systems have done?’
‘Tell it to your gullible uncle. This is a dangerous precedent — one more arrow in the quiver of the “unitary executive” principle, which is to say that King George will rule over us once more. Any citizen, Republican, Democrat, or third party, who would support such a monstrosity needs a refresher course in the American Constitution, and if that doesn’t work, a visa to some seedy banana republic where military juntas and torture dens are routine. They have no place in this republic, which as the founding fathers understood, requires eternal vigilance against control freaks and totalitarians. As ever, James Madison said it best: “It is a universal truth that the loss of liberty at home is to be charged to the provisions against danger, real or pretended, from abroad.”
+1000, Ben. Unfortunately I think it’s already too late to reverse the trend. As I have said before, a continuum exists which has absolute slavery at one end and absolute freedom at the other. Where we stand on that continuum today is open to debate, but the direction we’re headed should be obvious to all.
“King George will rule over us once more. Any citizen, Republican, Democrat, or third party, who would support such a monstrosity needs a refresher course in the American Constitution, and if that doesn’t work, a visa to some seedy banana republic where military juntas and torture dens are routine. They have no place in this republic, which as the founding fathers understood, requires eternal vigilance against control freaks and totalitarians. As ever, James Madison said it best: “It is a universal truth that the loss of liberty at home is to be charged to the provisions against danger, real or pretended, from abroad.”
Amen, brothah, amen.
Indeed, they have no place in this republic and they should be let know that.
Is this proof that Realtor are liars.
I have been looking at several streets near this house. There are several properties which are newer and range in square footage from 3500 sq.ft to 8500 sq.ft. Nothing much is selling. 3 houses in the same neighborhood come on the market at reasonable prices then are quickly taken off the market.
This house is bank owned. The real taxes on this house are about 10K. The real estate company and the realtors are listing the taxes $17,258.00. Which is a deliberate lie. They are doing this to prevent this bank owned home from selling as it will bring the comps down. What can I do?
SEE FOR YOURSELF.
All offers must be approved by the bank. Incredible buy. Sprawling home with many additions on a 1.6 acre lot.
http://www.cnyhomes.com/Listing/Search/info.cgi?mlnum=S263036
. (this house is crap but the hood is decent)
Lying realtors make me mad
If you know the estimated taxes are BS then why do you care. It’s actually to your benefit as you know the real number.
It looks like a nice place. The grounds look very nice. I hope you have a riding lawn mower.
As to the Realtor’s morality. They’re like politicians imo, a handful of good ones and the rest should be testing parachutes.
This house has been on the market for at least 4 to 5 years. The last asking price was $225K. I am not interested in purchasing this home. But I am hoping that if this house sells then new comps are established which will drop prices. When the comps are down the prices are likely to drop for other properties in the neighborhood. I am interested in other properties that are priced very high at the present time. Am I missing something?
Realtors in our area sometime will state lower taxes in their listings by about 10K to attract buyers. I am noticing this very often. All kinds of misinformation is being stated these days.
Ah, I mis-understood your intent. I thought that maybe you were interested in that house. The Realtors are misleading prospective buyers thereby keeping prices artificially high which is keeping you in standby mode like soooo many others.
MFers
That house is crap? Looks pretty nice to me.
What part of this house looks good to you Alpha, The patched up driveway, converted garage, shabby rooms with low ceiling, ugly kitchen or the overall rundown appearance.
The house has good bones- big rooms, hardwood floors, nice windows, double door entrance, French doors, built-in window seat/storage chests, nice patio and mature landscaping.
I agree the ‘updates’ are hideous, but- just like the dated drapes, wallpaper, carpeting, and paint color- are relatively easily fixed. It’s hard to tell ceiling height, but it looks like 8 feet to me. I would prefer 9 feet, but still, it’s not a disqualifier. Cheaper to heat.
“Style: Bungalow, Colonial, 2 Story”
? and ? and what?
Muggy the only good thing about this house is that it is near Wegman’s.
Nice!
All kidding aside, this is one of first two things I look for in FL (proximity to park and Publix).
Wow…. interesting take SUGuy. Very interesting.
You’ve heard my property tax rant here on the blog about massively inflating upstate NY and VT property taxes. Especially on REO. I’ve been getting tax info from zillow(it’s quick and easy).
Are you saying Realtors are scamming the public at large by misrepresenting tax information? This is stunning, even in consideration of how corrupt NAR really is. This really hits home because it is due to the inflated property taxes that we’ve abandoned any plans to buy there because of it.
Previously, we were interested in a BofA house that has been in default and empty since 2009. We put an offer in on it in 2010 but it fell into the Housing Crime Syndicate black hole and nothing ever came of it. Zillow indicates the property taxes went up 20% in 2011. At that point, we said forget about it.
I’m going to follow up. This is stunning.
I have seen recently Realtors who have small independent real estate companies basically themselves will put a sold sign on a property when they lose its listing. This is happening with the properties whose owners have moved out of state. Then after a few weeks to a few months the property appears with for sale sign again.
I have seen recently Realtors who have small independent real estate companies basically themselves will put a sold sign on a property when they lose its listing.
If you have an evil turn of mind like I do, why not report them to the local board of real-ah-tors? And the state licensing agency?
Methinks that what they’re doing violates some code of ethics. But that’s just me.
we’ve abandoned any plans to buy there because of it.
I wouldn’t give up as the area is beautiful. We have wide open beautiful scenic and peace full area. Down state feels like you are living in a can packed with other sardines. The traffic and the density of population in upstate is nice too.
I have travelled to most TOWNS along the eastern seaboard. VT, NH, Adirondacks and thousand Islands, Roscoe on up to CNY can’t be beat. IMHO
Today is to remember the Vets . The old WW2 vets almost never revealed what all they were through . And about 2% of them sought disability right afterwards . My next door farming neighbor , a mild mannered man who worked hard all his life, died several years ago . His obit listed all the campaigns he had been in , Including the battle of the Bulge, in Europe for like 3 years. I had no Idea, because he never talked .There were a lot of those old guys around. I respect that a lot .
What we have a hard time with is the fact that over half of all new Vets today are Claiming ,or are trying to claim disabilities , and want money for them , up to a dozen disabilities per person . That is nuts , if they were that bad off , they should never have gone.
Link?
http://news.yahoo.com/ap-impact-almost-half-vets-seek-disability-160656481.html
“This is nuts, if they were that bad off they should never have gone.”
They weren’t bad off when they left; What happend to them - this insane war thingy - happened to them while they were gone.
‘Mentally Unfit but Serving Anyway’
‘In its rush to send hundreds of thousands of young people into its endless wars of choice, did the American government unknowingly — even knowingly — deploy recruits into combat with underlying emotional predispositions to PTSD, substance abuse, violence, or all of the above?’
‘In 2006 and early 2007, 84.5 percent of all troops who screened positive for possible mental health problems were deemed combat-ready,” wrote reporters Matthew Kauffman and Lisa Chedekel. “That number marks a slight decrease since 2005, when 87 percent were deemed deployable.” Meanwhile, the paper reported that soldiers with mental problems were being heavily medicated with no monitoring on the battlefield, and sent back for multiple tours of duty, despite their diagnosed conditions.’
“They weren’t bad off when they left; What happend to them - this insane war thingy - happened to them while they were gone.”
That’s true but why were the WWII and Korea vets able to cope better. Why were the civilian populations of Europe able to cope after having their lives torn by the war? Are we building a nation of weaklings?
I see people much younger than me claiming that they can’t work or lift things because of bad backs; ploy or bad genetics? And if someone thinks that I don’t have a right to judge vets, I spent a year in Viet-nam @ Phu Bai and Hue. Do I have PTSD, yes, but others had it far worse in battle than I and it’s just a part of life to suck it up and go on with living. Have I filed for disability, no.
Give me your boy and I will give you back your man….Well, that did not work out to well for many of these vets now did it…
The atrocities and recklessness that these vets observed and were forced to participate in because its an “order” have life consequences…What type of person would you expect to return…What do you think, they just morph back into the person they were before they deployed…
18 vets commit suicide every day…Thats more dead vets in one year then the entire 10 year mission in Afganistan…
Hope you have a somber day in Crawford George…And many Somber days after that…
“The atrocities and recklessness that these vets observed and were forced to participate in because its an “order” have life consequences…”
x eleventyzillion.
“That’s true but why were the WWII and Korea vets able to cope better.”
A lot of them had no choice but to suck it up when they came home. Probably why so many of them buried themselves into their work when they came back.
I think part of the problem for the current generation is that they aren’t fighting a war, they are occupying a conquered nation. A very different and I suspect much more stressful task. I have heard war described as long periods of boredom punctuated with brief moments of terror. For the occupiers everyday is a day of looking over their shoulders while on patrol.
As mentioned above, my father wasn’t involved in WWII combat. But my aunt once told me that my dad’s best friend “got blown up in Europe.”
Heckuva way to go, but he probably didn’t suffer.
However, my aunt said that the death of his friend really shut my father up. I don’t remember him ever being a talkative guy. But, according to my aunt, there was a time when he was.
“A lot of them had no choice but to suck it up when they came home. Probably why so many of them buried themselves into their work when they came back.”
There is truth in this statement. I came from Viet-nam to Oakland. Was out of the Army the next day and three days later I was back in college working hard to catch up in my third semester of calculus and other courses. I didn’t sleep well, flashbacks and cold sweats but it kept me active and back into society. It was only the last 10 years where the emotions are surfacing that bring tears and solitude. My dad was on a carrier in the pacific in WWII hit by Japanese planes but he never talked about it and was optimistic about his fellowmen.
I didn’t sleep well, flashbacks and cold sweats but it kept me active and back into society. It was only the last 10 years where the emotions are surfacing that bring tears and solitude.
Hey, salinasron, we’re here to help. What can we do to be helpful to you?
It was only the last 10 years where the emotions are surfacing that bring tears and solitude.
Wow… I empathize, salinasron. And thank you for sharing that here.
It’s eye-opening to realize that there is still such a human cost to the vietnam war, even 40 to 50yrs later…
Many of the people joining the military had no intention of joining just to be the tip of the spear. They joined to take part in ajob training program, with free room and board, and an allowance. Many went into specialties like construction artillery, and transportation. Especially those in the “full time” National Guard”.
Instead of being “in the rear, with the gear” these guys bore the brunt of the Iraqi Dead Ender Roadside Bomb campaign.
Ive seen many of these guys around here. Not smart enough to get thru college or tech school, they joined because the military pay was better than anything they could get as a civilian. Or they were 25 to 35 year old J6Ps looking for an eazy part time job. A lot of these guys bailed as soon s they could, leaving the Army with a manpower shortage, filled by scraping the bottom of the volunteer barrel.
The answer…..the draft, mandatory in the event of any overseas intervention. If our intervention is needed to “protect our freedom” then its important enough to send the best that Wall Street and DC have to offer…..If not, then maybe we shouldnt send the serfs either.
By my count we have had maybe one constitutionally valid military deployment since WWII. All the rest were based on lies or unconstitutional actions by various branches of the government like the CIA. What kind of ethos do you get when the wars you fought in were unjust?
More specifically, today is meant to remember those in the military who didn’t make it home.
+1 Bill….Thats spot on…
Rest in peace, cousin Michael, who died in Viet Nam in 1968. He was 22 and had been there for a little less than a year.
(Not all the early baby boomers had an easy life with lots of jobs to choose from and great retirement benefits.)
Most of my uncle’s graduating class died in Vietnam.
I grew up with plenty of anti-war sentiment.
I watched that controversial Nightline a few years ago when they read a list of the dead from Iraq and Afghanistan. Or, rather, I mostly listened to it because I couldn’t quite make myself watch. It occured to me that except for there being very few female names, the experience it most closely resembled was listening to a graduation ceremony with all the names being read off one at a time. And that is when I kind of lost it.
One of my earliest memories is of being prompted by my parents to question why we were fighting in Viet Nam. When I think back on it, Michael’s death must have been pretty prominent in their minds at the time, though I suspect the memory is from a few years after he died. I have another cousin who was there and came back pretty much OK by all outward appearances, though he considers himself kind of messed up emotionally.
came back pretty much OK by all outward appearances, though he considers himself kind of messed up emotionally ??
Yeah think…I had three cousins that we all were inseparable from around 5-16…After that sports & girls came into play so we drifted apart some but still engaged in much laughter & love when we saw each-other…
All three were drafted and sent to Viet-Nam…My lottery number was so low that I was not…I happened to be out of state for the next number of years so It was about 6 after high school before I saw any of them again..Family gathering as I recall…
I was so thankful to see them…But the relationship had changed…It was now quiet & cold…No hugs…No laughter…Just a hand-shake…No talk what-so-ever about the war just “how ya been”…
I tried on many different occasions to re-engage with our relationship with no success…I think I felt guilty that I had not gone…I finally stopped trying figuring that I lacked the understanding of what they went through…
They stopped attending all family gatherings and it was many a year before I saw any of them again although they all live just a few miles from me… Usually at a funeral..
Today those three are inseparable…Its the forth guy that no longer fit in with the group…
What we have a hard time with is the fact that over half of all new Vets today are Claiming ,or are trying to claim disabilities , and want money for them , up to a dozen disabilities per person . That is nuts , if they were that bad off , they should never have gone.
My wife is on 20% disability for her knee. What happens is that people get injuries that don’t have to be permanent but then the army doesn’t let them heal. Happens all the time. The army philosophy is that they don’t care…they’ll get all they can out of you until you ETS or get medically discharged and then it’s the VA’s problem.
Happened to my mother’s father. He was in World War I and wanted to stay in the service after the war. Military found that he had an ulcer, so out of the service he went.
Back when I was growing up, I lived in a neighborhood where every house had a bar in the basement. But our house did not.
It was many years later that I came to understand the reason for those in-house bars. They were for the men of the house. Those guys were WWII veterans, and drinking is how they dealt with their war memories.
As for my dad, he was in a service academy (Coast Guard) until the final months of WWII. His first post-academy assignment was aboard a troop ship that was bringing GIs home from Europe.
Before he went to USCGA, he grew up in a household where his dad was quite the alcoholic. Ever heard that expression “another friend of Bill W.”? Well, my grandfather literally was a friend of Bill Wilson, the co-founder of Alcoholics Anonymous.
Grandpa and Bill Wilson both worked on Wall Street, and I’m happy to report that Bill helped Grandpa in a big way. Unfortunately, Grandpa did not achieve the lasting sobriety that Bill W. did.
So, in a nutshell, that’s why no Slim family home ever had a bar. Dad had already seen enough of what alcohol can do.
True story: the other day I was in a big box store and got involved in conversation with a fellow who was contemplating the purchase of a product that I also was considering. We’re standing there staring at the thing and turning the box around looking for the specs in English and discussing the relative merits and he’s showing me comparbable stuff on his I-phone, etc. He’s telling me how he just got back from Afghanistan and he’s been there on and off over eight years, etc.
Some spindly older floor clerk who has been listening in all of a sudden jumps and in and puts his outstretched hand between us and bellows “Thank you for your service!” (The implication being that I wasn’t being dick-sucky enough to the guy). The guy laughs and says “Thank you, but I’m a contractor”. The clerk gets all flustered and splutters, “Well, thank you anyway.” And slinks off.
“all new Vets today are Claiming ,or are trying to claim disabilities”
This is what happens when you violate your conscience and you take the life of or harm another human being. You know it’s wrong but you do it anyways because of _______(fill in the blank with some bullshit reason like “flags”, “muslims”, “terrorism”, etc)
The fact that more are coming forward with PTS tells me the violence is uglier than ever and the typical GI has an ever growing sense of right and wrong.
So, your suggestion is “War does not cause disability? So, most who claim it are malingering.”
IAT
The Fed’s indefinite low-rate environment is causing major problems for pension funds assuming increasingly-questionable indefinite 7-8 percent annual investment returns.
Public Pensions Faulted for Bets on Rosy Returns
By MARY WILLIAMS WALSH and DANNY HAKIM
Published: May 27, 2012
While Americans are typically earning less than 1 percent interest on their savings accounts and watching their 401(k) balances yo-yo along with the stock market, most public pension funds are still betting they will earn annual returns of 7 to 8 percent over the long haul, a practice that Mayor Michael R. Bloomberg recently called “indefensible.”
Now public pension funds across the country are facing a painful reckoning. Their projections look increasingly out of touch in today’s low-interest environment, and pressure is mounting to be more realistic. But lowering their investment assumptions, even slightly, means turning for more cash to local taxpayers — who pay part of the cost of public pensions through property and other taxes.
In New York, the city’s chief actuary, Robert North, has proposed lowering the assumed rate of return for the city’s five pension funds to 7 percent from 8 percent, which would be one of the sharpest reductions by a public pension fund in the United States. But that change would mean finding an additional $1.9 billion for the pension system every year, a huge amount for a city already depositing more than a tenth of its budget — $7.3 billion a year — into the funds.
But to many observers, even 7 percent is too high in today’s market conditions.
“The actuary is supposedly going to lower the assumed reinvestment rate from an absolutely hysterical, laughable 8 percent to a totally indefensible 7 or 7.5 percent,” Mr. Bloomberg said during a trip to Albany in late February. “If I can give you one piece of financial advice: If somebody offers you a guaranteed 7 percent on your money for the rest of your life, you take it and just make sure the guy’s name is not Madoff.”
…
It’s not just public pension funds that are looking for high returns, my employer - a corporation - is projecting an eight-and-a-half-percent return for this year just as it did for last year and the year before. The fact that these projections fall wide of the mark does nothing to disuade it from making them.
It used to be - a couple of years ago - the pension fund was way overfunded. Now it is pushing the eighty-percent funding level.
There two ways to solve this problem: One way is to put more money into the fund, the other way is to cut back on what is being paid out.
I have little doubt as to which solution will be used.
It is worth pointing out that those return assumptions are nominal, not real. So the wild card going forward is not merely growth, but also inflation; some combination of high future growth and inflation could suffice to make those 7%+ assumptions pencil out.
I have little doubt as to which solution will be used.
I’m guessing that you are right about that, combo.
But if the solution ends up being cuts to benefits, isn’t it possible that the ones taking their cash-out options and investing elsewhere might actually be making a smart move?
What about this solution to pension fund return rates being too high? Suppose a public pension fund with $XB assumes as unrealistic 8% return, but also creates a public bank for depositors promising 2%. The bank receives $XB in deposits and now the pension fund must only earn 5% on a portfolio twice as large. Everyone wins?
Europe debt crisis dragging world economies down
New data show the Eurozone woes intensifying a global slowdown, with signs that even Germany, China and other pillars of growth are in trouble.
Discount store in Greece
Customers browse through the goods at a discount store in Athens. Analysts in the U.S. fear that if Greece abandons the euro, the U.S. economy could suffer as well, as Europe is a major market for U.S. exports. (Kostas Tsironis/Bloomberg / May 24, 2012)
By Don Lee and Henry Chu, Los Angeles Times
May 25, 2012, 5:00 a.m.
WASHINGTON — The Eurozone debt crisis is intensifying a global slowdown, with new signs that even powerhouse Germany may be faltering, adding to worries about China and other major pillars of economic growth.
Analysts worry that economies and markets now are so intertwined that the emerging slowdown will further weaken economic confidence in many parts of the world, which is already fragile.
While heavy indebtedness and belt-tightening are blamed for the shrinking growth in Europe, economists say the biggest developing countries are suffering from the effects of policies imposed by central bankers intent on thwarting inflation. Meanwhile, the United States, the world’s largest economy, is trudging along at a mediocre pace.
“You’ve got a combination of troubles in Europe and a deceleration in the emerging world,” said Nariman Behravesh, chief economist at IHS Global Insight, an economic research firm. The result, he said, is that global growth will slow sharply this year from 2011. And trade growth will be half of last year’s pace.
…
But the US debt problem is A-okay?
Marc Faber: 100% Chance of Global Recession
Published: Friday, 25 May 2012 | 4:40 PM ET
By: Lee Brodie
The stock market appears to be at a critical inflection point. That’s the takeaway from widely followed economist Marc Faber, author of the Boom, Gloom & Doom newsletter.
Faber’s bearish market calls have been followed closely since 1987 when he warned his clients to cash out before Black Monday.
And in a live interview on CNBC’s Fast Money Halftime Report, Faber again warned that economies of the world may be on the brink of a serious slowdown.
Faber indicated that while investors remain focused on Greece and Europe – other issues, bigger issues are looming. And they’re more threatening.
“As an observer of markets – whenever everyone focuses on one thing – like Greece and Europe – maybe they miss issues that are far more important – such as a meaningful slowdown in India and China.”
…
I’ve long thought that the stock market is overvalued. I think the current rally is built on air, and nothing more.
Churn, baby churn!
Pump-n-dump!
There sure is no shortage of MSM-reported global economic gloom-and-doom these days. Does anyone still suggest that markets are decoupled, or is that another failed theory at this point?
ECONOMY
Updated May 25, 2012, 10:27 a.m. ET
New Signs of Global Slowdown
Weak Reports in U.S., Europe and China Suggest Economies Are Slipping in Sync
By JON HILSENRATH and JOSHUA MITCHELL
New signs of a global slowdown are darkening the economic outlook.
New signs of a global slowdown are darkening the economic outlook. Jon Hilsenrath joins The News Hub to take a look at them. Bloomberg.
On Thursday, the U.S. reported that businesses were slowing their orders of computers, aircraft, machinery and other long-lasting goods. Measures of business sentiment in Europe slipped, and reports from purchasing managers at manufacturers around the globe turned down. Among them, China, the world’s second-largest economy, registered its seventh straight drop in an important manufacturing index.
With the latest reports, a new economic threat is emerging: That activity is slowing in sync around the globe and not just in a few markets with their own isolated problems. Europe, struggling with the risk of a Greek pullout from the euro area and broader fiscal problems, is the epicenter of global economic concerns right now. But reports of economic trouble are turning up in China, India, South Africa, Brazil and elsewhere.
When the global economy is performing well, synchronized growth reinforces itself and spreads prosperity wide and far. But slowdowns can become interconnected and self-reinforcing, and the global economy has been plagued by them since the financial crisis of 2008.
The Organization for Economic Cooperation and Development earlier this week cut its 2012 forecast for growth in developed economies. The International Monetary Fund sees the global economy growing more slowly than 2011’s 3.9% rate.
Economic weakening, in turn, means investors are taking it on the chin. The MSCI World Index for stocks, which tracks markets around the globe, is down more than 9% since mid-March. Crude oil prices, another proxy for global demand, are down 15% so far this month.
Taken together, this could lead to new pressure on policy makers to respond with growth-boosting measures. The Federal Reserve so far has been noncommittal about whether it would launch any new measures to stimulate the U.S. economy. European officials are under intense pressure to back away from austerity measures, and the Chinese are looking for new ways to boost growth.
…
The only people who think ANYTHING is “de-coupled” are Marie Antoinette’s descendents… from reality.
Here’s my prediction
1. This will not be a question put forth in future debates between Romney and Obama.
2. No matter who is elected this trend will accelerate.
3. The Supreme Court will rule on this case before it even hits the door.
Ah, yes, we must develop Florida at all costs.
“Wetlands expert suspended by DEP after she refuses to approve permit”
http://www.tampabay.com/news/environment/wetlands/wetlands-expert-suspended-by-dep-after-she-refuses-to-approve-permit/1232352
When I’m at work these days, I can’t stop thinking about how screwed most of my generation is. With few exceptions, the entire support staff at my law firm are lucky duckies who are between 25-35 y/o. Yet, they are the backbone of the law firm–they gather and prepare all the documents, they deal with the banks/courts/government, they make or break the attorneys. And yet, from what I’ve seen they make about $12/hr on average. With minimal benefits.
On the other hand, I’m not sure what they deserve. Most of them can’t think that logically, make basic spelling and grammar mistakes, and this includes the ones that have college degrees (of course, from dubious colleges). The ones who are pretty girls often live with a boyfriend who has a good job, but otherwise most of them live at home with parents or roommates. I’m not judging this, but I do think that the living situation further delays maturation and entry into real adulthood. Of course, Maryland housing prices and rents are still high, so I wouldn’t recommend they move out necessarily.
I guess my larger point is that I think Lucky Duckies make up 50% + of my age group and it’s definitely changing people’s expectations, values, and maturation. I’m 30, so I’m the same age as a lot of these people, but I feel “old” around them.
joe smith…Are these all paralegals or do some have law degrees ??
Paralegals, mostly. But also the people who do title work and other things related to mortgage banking.
What strikes me most is how complacent they are. I’m also taken back by what they choose to spend money on, by how little they seem to understand their situation, and by how little they learned in college. Like I said, they’re lucky duckies, but I’m not sure how much more they “deserve”? The words planning and discipline are alien to them.
** There are a few exceptions, of course.
Did you grow up middle class with parents who understood a reasonable amount of how the world works? Your description sounds normal to me, I grew up blue collar out in the sticks. I’m still working to get beyond that mindset now…
None of these people are from the sticks. This is in Anne Arundel County, MD, about halfway between Baltimore and DC. And (virtually) all of these people went to college. However, almost nothing is expected of them at home and nothing was expected (or learned) in college.
I’m not criticizing these people as individuals, really. I’m remarking on how society has no standards these days. These people can’t do basic things like cook, do laundry, teach themselves new skills, etc. etc. So I’m not sure they deserve much more than the Lucky Ducky lifestyle. I feel bad for this situation–because it’s going to really change consumption patterns and society responsibility in the future.
These people can’t do basic things like cook, do laundry, teach themselves new skills, etc. etc.
These are adults who don’t know how to wash their own clothes? Or cook a meal? Or learn how?
Yeesh! I’d go bonkers working with people like that.
I’m not judging this, but I do think that the living situation further delays maturation and entry into real adulthood.
I would tend to agree. But then again, I couldn’t wait to get out of the folks’ house and strike out on my own.
True, there were times when I struck out, but guess what? That’s life. You get a lot of strikeouts.
Then there are those solid singles and doubles that make up for it. And, occasionally, wow, you hit one over the center field wall.
I like the baseball analogy
Slim…
Your parents probably wouldn’t let you be complacent and lay around the house. In other words, they were real parents and worthy role models.
Most of these people aren’t just living at home–they’re living out of their parents’ fridge, using their parents cable and utilities, etc. Sad thing is, they blow the money they should be saving via this arrangement.
Sad thing is, they blow the money they should be saving via this arrangement.
Too bad they didn’t have my parents. They’d be giving ‘em the third degree about any sort of spending silliness.
Not to defend them, but you can’t save money on $12hr.
Not just your generation.
Do you have any idea how many boomers are working for the same pay?
Millions.
Do you want to know how they got there? Massive pay cuts over the last 25 years. 30% on average. For many, 50% pay cuts.
June is a 3 payday month for me. I get to avoid Bank of Dad for the rest of summer. Now, if I can get promoted, combined with my son entering VPK (saves $100/mo.), I can avoid BofD altogether.
Congratulations. Muggy. I hope you make it.
A lot of commentary over the weekend about US Americans unwillingness to “sacrifice/suffer”
To this, I say that there has been a lot of sacrifice by a lot of people, none of which has been suffered by the prime instigators of this fiasco. I for one refuse to take any more screw jobs, until the screwing is more equitably distributed.
I guess this makes me a Socialist.
“To this, I say that there has been a lot of sacrifice by a lot of people, none of which has been suffered by the prime instigators of this fiasco. I for one refuse to take any more screw jobs, until the screwing is more equitably distributed.
I guess this makes me a Socialist.”
+1
Your post reminds me of that woman at the collection agency looking for “openings,” those pockets of exploitable money.
It applies to a lot more than just collections. It applies to needs industries like gas prices, health insurance, and especially rents. They raise the price and dare someone to pay it. Because it’s a need, someone comes up with the money: BoD, grandma moving in with her SS check, roommates, credit card, check-cashing, pawning collections little by little… all of them are considered openings. No dollar, from anybody, will be allowed to escape.
Off to work…….. Gotta keep the bizjets ready for the 1 percenters vacations to Jackson Hole and Augusta.
Laughin’ out loud in Tucson, XGs-fixr!
Gotta keep the bizjets ready for the 1 percenters
Loosen a nut for us!
I recommend a much more passive-aggressive strategy: Have a nice breakfast of beans before you go to work. Then do work in an area where the 1%-ers are sure to be downwind of you.
Just make sure to save some extra money these next few years while you wait for the other shoe to drop from your daughter’s People of Walmart wedding. Because I’m pretty sure you were correct when you predicted what the future holds for that couple.
On a whim, I checked Redfin’s current MLS inventory for Los Angeles County, an area with about 1.5 million single family housing units, according to this web site. Redfin dot com shows a total of 20,310 homes currently on the market, which amounts to (20,310/1,499,694) X 100% = 1.35% of all housing units on the market right in the middle of the red-hot spring sales season.
My guess is that number will have to increase considerably from its present level over the next two decades, in order for the market to absorb the turnover of retiring Baby Boomers moving on to retirement homes in Palm Springs or Arizona.
It is also noteworthy that 2,790 of the homes on the market are offered at prices over $1,000,000. This is (2,790/20,310) X 100% = 13.7% of all LA County homes for sale. How does that figure stack up against the percentage of prospective buyers who are qualified to buy a home priced above $1,000,000?
Here are the some comparable numbers for San Diego County:
Housing units, 2010 = 1,164,786
Housing units in multi-unit structures, percent, 2006-2010 = 35.5%
Estimated single-family housing units = 64.5% X 1,164,786 = 751,287
Number of single-family homes currently listed on Redfin = 5,030
(5,030/751,287) X 100% = 0.67%, or 1 out of every 150 existing homes
Number of single-family homes offered at prices above $1M = 1,228
Percentage of single-family homes offered at prices above $1M = (1,228/5,030) X 100% = 24.4%
Is it safe to assume that one in four prospective buyers of single-family homes in San Diego County is qualified to buy in the $1M+ price range?
I have a colleague at work in a situation which I suspect is quite typical these days around SoCal. Hubby bought their home at the tail end of the early-1990s recession for a price in the mid-$400s.
Tried to sell last summer, first around $1.8M, then down to $1.5M, with no takers. Need to sell sooner than later unless hubby’s work situation drastically improves. Home is now off the market, but the talk is that they will try again at some point later this year, with a new Realtor®.
Zillow’s estimated value range is $1.1M to $1.8M; eppraisal’s is $660K-$892K. One of those ranges is off by $100Ks.
With a global second dip of the Great Recession looming, I wish them luck at finding a buyer willing to offer north of $1M.
CIBT, have you been tempted to remind them that there is some market-clearing price for there house, at which it will sell very quickly?
Oh no — there is no market clearing price. Take it from the self-proclaimed ‘experts’ (e.g. FPSS and Prechter) — the market is illiquid.
I think you mistook FPSS’ meaning then, Prof.
FPSS was just saying that when the bid-ask spread is too wide (e.g. buyers and sellers are far apart), no transactions occur. That is an illiquid market.
Any illiquid market can become liquid when either a buyer or a seller moves to the place that the other party is already at in terms of pricing expectations.
Now that the attention has shifted to Spain, is it safe to assume the Greek crisis is resolved?
May 28, 2012, 10:02 a.m. EDT
Spain pressured as market weighs Bankia fallout
Rajoy repeats no European bailout for country’s banks is needed
By Barbara Kollmeyer, MarketWatch
MADRID (MarketWatch) — Bankia SA shares recovered some of a nearly 30% drop on Monday, but stayed significantly lower as markets got the first chance to react to news of a bigger-than-expected bailout need for the troubled lender and mulled the broader implications for the euro-zone crisis.
Shares of Bankia (ES:BKIA -13.38%), which had been suspended Friday ahead of that bailout news and took several minutes to begin trading on Monday, sank to an all-time low of €1.11 at one point, but were last off 12% to €1.35, according to FactSet Research.
On Friday, Bankia said it would need to ask the government for a bailout of €19 billion (around $24 billion), a figure that exceeded some estimates calling for a recapitalization of around €15 billion. The bank, formed of a merger of several savings banks, is a casualty of the collapse of Spain’s housing market that triggered a recession and ignited another leg of the sovereign-debt crisis.
The future of the European economy and the very real possibility of the U.S. economy being pulled back into recession are weighing on sentiment.
Losses for the IBEX 35 index (XX:IBEX -2.17%) increased as the afternoon wore on. The index sank 2.1% to 6,326.70. Losses for Spain chipped away at a rally for the rest of Europe, which earlier gained on a weekend poll out of Greece that showed the pro-austerity party taking a lead ahead of next month’s elections. Europe stocks rise after Greek polls
The yield on Spain’s 10-year government bond (ES:10YR_ESP +0.08%) shot up 15 basis points to 6.4348%, according to FactSet Research, while the cost of buying protection against a Spanish default reportedly hit a record on Monday. A level of 7% triggered bailouts for both Ireland and Greece.
“Investors simply started looking at the figures,” said Predrag Dukic, senior equity sales trader at CM Capital Markets. “€23.4 billion for a ‘solvent’ bank is a lot. On top of that, the rumors of an additional €30 to €35 billion for other, smaller banks such as Catalunya Caixa, [Novagalicia] and Banco de Valencia, are not helping the market sentiment either.”
The figure of €23.4 billion refers to the €19 billion bailout, plus additional government equity that has already been injected into Bankia. It was just two weeks ago that Bankia plunged on rumors investors were pulling funds out of the lender, triggering bank and government officials to respond that the lender was solvent and its funding problems had been resolved.
In a televised news conference on Monday, Spanish Prime Minister Mariano Rajoy repeated that there would be no funds sought from Europe to rescue Spanish banks.
Analysts also noted speculation that of three more banks to be rescued — as reported in the Spanish newspaper El Mundo on Monday — Rajoy reportedly said the government would “act when needed.” All three banks — Banco de Valencia, Novagalicia and Catalunya Caixa — have already been nationalized.
…
European shares knocked by Spain bank worries
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10:58am EDT
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Analysis & Opinion
Bankia’s whopping bailout is double-edged sword
Greece needs to go to the brink
Mon May 28, 2012 1:05pm EDT
* FTSEurofirst 300 slips 0.1 percent
* Spain’s IBEX biggest laggard, down 2.2 percent
* Athens bourse jumps 6.9 pct after election polls
By Tricia Wright
LONDON, May 28 (Reuters) - European shares ended in negative territory on Monday, reversing earlier gains in thin trade as concerns surrounding Spain’s banks returned to the forefront of investors’ minds.
The FTSEurofirst 300 closed down 0.1 percent at 984.01, having earlier reached a high of 993.21 - boosted by opinion polls suggesting Greece’s pro-bailout parties may be able to form a government committed to staying in the euro zone.
But trade was light as a number of European markets were closed, accentuating the moves, with the FTSEurofirst 300 trading just two thirds of its 90-day daily average.
…
I can remember when Metrocenter was *the* mall in Phoenix. These days? Ehhh, not so much.
Built in the 70s?
That’s a tear down.
What better way to lobby your chief regulator than to join its board?
Bloomberg News
Dimon Adds Talent to New York Fed Board, Allstate’s Wilson Says
By Noah Buhayar and Zachary Tracer on May 22, 2012
JPMorgan Chase & Co. (JPM) (JPM) Chief Executive Officer Jamie Dimon adds insight to the Federal Reserve Bank of New York board, said Tom Wilson, the Allstate Corp. CEO who previously was a director at the Chicago district bank.
“Jamie Dimon is a talented executive who knows a tremendous amount about financial services,” Wilson said today in a phone interview after the annual meeting of Allstate, the largest publicly traded U.S. home and auto insurer. “If it met his objectives and the objectives of the New York Fed board, then they should continue the relationship.”
Elizabeth Warren, a Democrat running for U.S. Senate from Massachusetts, has called for Dimon’s removal from the New York Fed board after he disclosed a $2 billion trading loss by his bank on May 10. Treasury Secretary Timothy F. Geithner has said having bankers on the board of the New York Fed creates a “perception” problem.
There are 12 regional reserve banks that oversee financial institutions in their districts and whose presidents serve on the policy-setting Federal Open Market Committee. The New York Fed chief has a permanent role on the panel, and other district bank presidents vote on a rotating basis. Wilson said the Chicago Fed benefited from the perspective of bankers.
“It creates a better dialogue and decision-making process,” Wilson said. “I found that the input and insight of the bankers were helpful to our dialogue as a Fed board, in terms of what we voted on.”
Trading Loss
Dimon is one of three bankers sitting on the board of the New York Fed, as required by the Federal Reserve Act of 1913. The 2010 Dodd-Frank Act ended the practice of banker directors having a vote in electing regional presidents, a move that New York Fed President William C. Dudley said in a September interview that he supported.
Dimon announced his bank’s trading loss two months after New York-based JPMorgan, the biggest U.S. lender by assets, passed a Fed stress test that put its loans and securities through a scenario of economic turmoil.
…
Talent. There’s that word again.
The inbred aristocracy always thinks highly of itself.
I think I may have come up with a way to pay the national debt off. Something along the lines of Jerry’s MD telethon. Only we have it on Memorial day. Something like………………………………………
Dimon vs. the Dragon or Blankfein vs. the Beast or Frank vs. Fist of Fury (pun intended).
It would be a Karma based reality show, only PPV.
How much would you pay to see it?
Diamond In The Rough (curb appeal galore)-a post-contractor friend & us walk through update-
Ok, we reviewed all the bullet “what the hell is this” list….
*Abestos issues to change out old HVAC
*Mold could be 1 of the 18 toxic varieties
(leaking hallway tub/shower into the wall on the other side- an entry closet).
* 1960’s slab has no rebar- the 1994 quake beat the sh*t out of the neighborhood according to neighbor who opened up to us on lots of stuff.
* Forest behind the house is pretty, but the rain run off is another story.
*The inground spa is additional trouble.
*We knew about all the new windows and doors. The front door was beautiful. Very, very expensive leaded glass design,and nice asian flair.
Rough estimate to fix this lipstick on a pig: $60K minimum
Haz Maz would be involved. Forget it.
Run.
Are you among the 15% of Americans who still “trusts” the stock market? And what seems like a safer bet: Stocks, or farmland?
ABREAST OF THE MARKET
May 28, 2012, 5:03 p.m. ET
Stock Market Loses Face
Facebook Debacle Turns High Hopes Into Potentially Mood-Souring Skepticism
By JOE LIGHT
Sean Kelly, managing director at market-making firm Knight Capital Group Inc., (KCG -2.41%) hoped that Facebook Inc.’s (FB -3.39%) initial public offering would deliver a “shot in the arm” to retail investors who feel queasy about the U.S. stock market.
Discount-brokerage executive Fuad Ahmed, whose company Success Trade Securities Inc. owns $2.50-a-trade firm Just2Trade, believed the giant deal could “build confidence.”
Instead, Facebook’s banged-up share price and the technical snarls that bollixed up the stock’s first day of trading on the Nasdaq Stock Market have left some small investors even more glum about the overall stock market, they say.
If that mood lasts, stocks could lose even more oomph. The Dow Jones Industrial Average fell 74.92 points, or 0.6%, to 12454.83 on Friday, leaving the index down nearly 825 points, or 6.2%, since May 1 and up just 1.9% for the year despite a strong first quarter.
Facebook shares have lost 16% of their value since the social-networking company went public on May 18 at $38 apiece. On Friday, the stock fell 3.4%, or $1.12, to $31.91. Months of runaway anticipation for the IPO that helped some investors ignore the euro-zone crisis and other problems suddenly seems long gone.
It is impossible to measure the impact of Facebook’s flubbed deal on overall investor confidence. But there is at least one sign of possible fallout: More than $3 billion was yanked from U.S. stock mutual funds by small investors in the week ended Wednesday, according to EPFR Global Inc. in Cambridge, Mass.
That was the worst week for withdrawals since March. In the previous week, investors added $311 million to U.S. stock mutual funds.
Just 15% of Americans trust the stock market, according to the Chicago Booth/Kellogg School Financial Trust Index, a quarterly survey. March’s results, released in early May, show just a small increase from 13% in March 2009, near the stock market’s bottom, says Paola Sapienza, a Northwestern University professor who helped start the index.
Many small investors began pulling out of U.S. stocks more than a decade ago, and the financial crisis accelerated the retreat. Confidence took another beating in the May 2010 “flash crash,” when the Dow briefly plunged nearly 1,000 points.
Since the flash crash, $370 billion has been withdrawn from U.S. stock funds by small investors, according to EPFR. This year, average daily trading volume on the New York Stock Exchange is about 3.8 billion shares, down from about five billion in early 2010, while discount broker TD Ameritrade Holding Corp. had an average of 368,000 client trades a day in April, down 8% from a year earlier.
David Guthrie, a 30-year-old actor in Toronto, bought 15 shares of Facebook on its opening day. Before then, he had bought just one stock, yet saw the market as a place to make his savings rise in the long run. Now he feels burned.
“If Facebook had made a lot of money, I’d try it again,” Mr. Guthrie says. After the stock’s disappointing slide, “I would never put big money into the stock market.”
Ryan Detrick, senior technical strategist for Schaeffer’s Investment Research in Cincinnati, says the stumble by Facebook has “hammered home again…a lot of negativity toward the stock market” by retail investors.
Dennis Koyle, a 61-year-old farmer and saddle maker in Gooding, Idaho, pulled back on stock investments after being burned by the technology bubble in 2001. Recent kinks like the Facebook IPO make him even more wary.
“It makes people not trust that whole system,” says Mr. Koyle, who owns some mutual-fund shares but has most of his money invested in farmland. “To me, there’s always a prevailing risk that the gains that the stock market has made could evaporate tomorrow, just like they have many times.”
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Facebook’s IPO Fiasco Seen as Deepening Distrust of Stock Market
Elizabeth Ody and Margaret Collins
Monday, May 28, 2012
May 26 (Bloomberg) — Facebook Inc.’s initial public offering, plagued by trading errors and a 16 percent drop in the share price, will push more individual investors out of a stock market they already distrust after the financial crisis.
“This is clearly the latest in a long string of events that is eviscerating the confidence investors have in the market,” said Andrew Stoltmann, a Chicago attorney who represents retail investors. “The perception is Wall Street jiggered this IPO so the underwriters made money, Facebook executives made money and the small investor got left holding the bag.”
…
Suppose you had to choose one of the following as your sole asset class to invest new money over the next decade:
1. Housing
2. Stocks
3. Farmland
4. Gold
5. Mattress money (e.g. F.D.I.C. insured bank deposits)
6. Treasurys
7. Other (you specify)
Which would you choose, and why?
Mattress money and Treasuries. Because I’m more interested in the return OF my money than the return ON my money.
Vegas.
Wasn’t too long ago that the Firedoglake blog had a post about small investors and Wall Street. It seems as if the little guys and gals are no longer interested.
The post suggested that deserting Wall Street seems to be more effective than occupying it.
What I don’t get is, with mass withdrawal of small investors from the stock market, what is propping it up these days?
Perhaps your “air” theory is on target; I really don’t claim to understand it.
What I don’t get is, with mass withdrawal of small investors from the stock market, what is propping it up these days?
FWIW, the only little people that are in the stock market are conscripts in their employer’s 401k plan, and most of them would cash-out in a New York second given the chance.
Got that right.
Euro debt crisis: should investors prepare for a Greek exit?
By Paul Farrow
7:00AM BST
27 May 2012
The chances of Greece exiting the euro intensified last week – so much so that EU leaders were warned to have contingency measures in place.
Such was the demand for safe-haven assets that investors rushed to snap up German bonds that paid a coupon of 0pc. That’s right, investors piled in to buy government bonds that will not deliver a return but are deemed among the eurozone’s safest assets.
Morgan Stanley, the investment bank, published a note on Friday to warn: “We think that the ramifications of a Greek exit are more serious than the market anticipates. While a euro zone break-up is not our base-case scenario, we raise our subjective probability to 35pc from 25pc, and reduce the timescale of this move to 12-18 months from five years.
“We believe that the most likely scenario for a divorce is a Greek exit preceded and followed by strong contagion. There are three main channels for contagion: the sovereign, the banking sector and the political situation. The countries most at risk of material contagion seem to be Italy, Spain, Ireland and Portugal.”
Brian Dennehy, a financial adviser, has already prepared his clients’ portfolios for the FTSE100 plunging to 4,000 by the end of the year. “Our clients have largely been de-risked for many months,” he said. “In practice, this means none tend to have more than 20pc in equities. Although there could be some good news if the FTSE hits these levels, if investors are unprepared the risk is that they panic into selling at precisely the wrong time.”
…
The chances of Greece exiting the euro intensified last week – so much so that EU leaders were warned to have contingency measures in place.
So what are these EU leaders expected to do; maybe stock-up on some Astroglide for their taxpayers since there are likely ten years of asset depreciation and American quantitative easing (read: energy and food inflation) ahead?
The U.S. is not the only country where people are freaking out over the stock market situation.
Tue, May 29, 2012 - Page 12
Consumer confidence falls on stock market worries
By Amy Su / Staff reporter
People wander around a shopping mall yesterday. According to National Central University, Taiwan’s Consumer Confidence Index fell this month.
Photo: CNA
The consumer confidence index (CCI) fell for a second straight month this month, mainly due to worsening confidence in the local stock market, a National Central University survey showed yesterday.
The index was down 1.31 points to 77.61 this month, marking its lowest level since December last year, the survey showed.
The CCI benchmark gauges public expectations about the stock market, household finances, durable goods, job opportunities, consumer prices and the economic outlook for the next six months.
This month’s survey — which polled 2,432 people over the age of 20 from May 19 to May 21 — only showed improving sentiment on job opportunities, while uncertainty over the other five sectors expanded, the university’s Research Center for Taiwan Economic Development said.
“The results indicated survey respondents remained cautious on the economy over the near future,” center director Dachrahn Wu (吳大任) said by telephone.
…
May 28, 2012, 10:26 a.m. ET
2nd UPDATE: Safe Haven Bonds Rally On Spanish Banking Fears
–Spanish spread against Bunds hits record high on fears over banking system
–Dutch, Finnish yields hit record lows as investors flee to safe havens
–Bund yields also close in on all-time lows
(Adds record lows in Dutch, Finnish bonds, move in German Bunds.)
By Tommy Stubbington
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)–Dutch and Finnish bond yields sank to all-time lows Monday, while German Bund yields fell close to records as growing fears over the health of Spain’s banking system prompted a fight to safety in bond markets.
Spanish sovereign bonds came under heavy pressure, pushing yield spreads against German bunds and debt insurance costs to record highs, after the government announced a EUR19 billion bailout of Bankia.
The announcement late Friday, effectively nationalizing Bankia, raised concern the government may be on the hook for further funds to prop up its fragile banking sector. Bankia is Spain’s third-largest lender by assets, and public finances are already precarious.
Spanish 10-year bond yields climbed 18 basis points to 6.47%, its highest in 2012, before easing back to 6.43%, according to Tradeweb. The yield spread against 10-year bunds widened to more than 500 basis points, a record high.
Unease over Spanish debt spurred demand for safe haven bonds. Dutch and Finnish 10-year yields record lows of 1.78% and 1.64% respectively. Yields on German Bunds, having started the day higher, slipped by a basis point to trade at 1.36%, just one basis point above their all-time low.
The cost of buying protection against a Spanish default pushed to a fresh record, with five-year credit default swaps on Spain widening 10 basis points to 557 basis points, four basis points wider than the previous record close reached May 21, according to data-provider Markit.
Credit default swaps are derivatives that function like an insurance contract for debt. If a borrower defaults, sellers compensate buyers.
With foreign Spanish government bonds increasingly in domestic hands, market participants are concerned about the ever-closer relationship between the government fighting to bring its budget deficit under control and the banking system.
Spanish Central Bank data Monday showed holdings of Spanish government bonds by non-residents dropped to 48.8% of the total last year from 53.4% in 2010. That figure is set to fall further following the European Central Bank’s two long-term refinancing operations in December and February, which fueled domestic demand for Spanish sovereign debt.
Spanish yields are likely to continue to rise, with the government and the banks locked in a “feedback loop”, said Richard McGuire, an interest rate strategist at Rabobank International.
“The process is self-fulfilling. The more [sovereign] yields rise the more denuded banks’ balance sheets become. This in turn fuels concerns about the banking system which further inflames yields,” McGuire said.
…
European Debt Crisis
Bailed-out Bankia stock takes a beating
by Amy Scott
Marketplace for Monday, May 28, 2012
A woman uses a Bankia ATM machine in Madrid.
Pedro Armestre/AFP/Getty Images
Tess Vigeland: The U.S. markets may be closed on this Memorial Day holiday. But in Europe, shares in one of Spain’s largest banks took a beating. The losses came after news that a government bailout will cost about $19 billion more than expected. Meanwhile it’s not exactly clear how the Spanish government will pay for that bailout. The ongoing banking crisis there has pushed the cost of borrowing to a near-record high.
Marketplace’s Amy Scott has more now on what that means for the European economy and why it matters here.
Peter Hahn teaches finance at the Cass Business School in London. He says now Spain’s regional banks are sitting on billions of euros of bad debt.
By lending it, to homebuyers and developers who now can’t pay. A few years ago seven regional banks merged to create Bankia. As losses piled up, the Spanish government seized the bank earlier this month. And with more banks on the verge of collapse, Hahn says there’s talk in Europe of a U.S.-style bank bailout.
Spanish Prime Minister Mariano Rajoy dismissed the idea of an international bank rescue today. And analyst John Raymond with CreditSights doesn’t expect much fallout here in the U.S. He says Bankia’s troubles are specific to Spain.
But Spain’s troubles are fueling more talk of a breakup of the eurozone, which could disrupt global trade and hurt U.S. companies doing business in Europe.
I’m Amy Scott for Marketplace.
Me confused. Doesn’t quantitative easing by the Fed, which amounts to asset purchases in order to bury them on the Fed’s balance sheet, automatically shrink the amount of assets on the market?
Bloomberg Businessweek
News From Bloomberg
The dollar is proving scarce, even after the Federal Reserve flooded the financial system with an extra $2.3 trillion, as the amount of the highest-quality assets available worldwide shrinks. Photographer: Scott Eells/Bloomberg
Bloomberg News
Dollar is Scarce as Top-Quality Assets Shrink 42%
By John Detrixhe on May 28, 2012
The dollar is proving scarce, even after the Federal Reserve flooded the financial system with an extra $2.3 trillion, as the amount of the highest-quality assets available worldwide shrinks.
From last year’s low on July 27, the greenback has risen against all 16 of its major peers. Intercontinental Exchange Inc.’s Dollar Index surged 12 percent, higher now than when the Fed began creating dollars to buy bonds under its extraordinary stimulus measures at the end of 2008.
International investors and financial institutions that are required to own only the highest quality assets to meet investment guidelines or new regulations are finding fewer options beyond dollar-denominated assets. The U.S. is one of only five major economies with credit-default swaps on their debt trading at less than 100 basis points, meaning they are viewed as almost risk free. A year ago, eight Group-of-10 nations fit that category, data compiled by Bloomberg show.
“The pool of high-rated assets has been shrinking, not just in the euro zone but elsewhere as well,” Ian Stannard, Morgan Stanley’s head of Europe currency strategy, said in a May 22 telephone interview. “With the core of Europe shrinking, and the available assets for reserve purposes shrinking, it makes the euro zone less attractive.”
Euro Depreciation
The dollar is gaining mainly at the expense of the euro, which has depreciated almost 5 percent the past six months against a basket of nine major currencies tracked by Bloomberg as nations from Spain to Italy see their credit ratings downgraded amid the region’s sovereign crisis.
Spain, which has about $917.5 billion of debt, has been cut six levels by Moody’s Investors Service to A3 from Aaa in September 2010. Italy, with more than $2 trillion of debt, has been reduced four levels to A3 from Aa2 in October.
“We’re seeing many more periods of dollar buying during these uncertain times,” Ken Dickson, an investment director of currencies at Standard Life Investments in Edinburgh, which manages $257 billion, said May 24 in a telephone interview.
The U.S. currency appreciated 2.06 percent last week to $1.2517 per euro in New York after touching $1.2496, the strongest since July 2010. It gained 0.84 percent to 79.68 yen. The Dollar Index jumped 1.37 percent to 82.402, its fourth- straight weekly rally.
Bigger Share
The five economies with default swaps trading at less than 100 basis points have a combined $14 trillion in debt, with the U.S. accounting for 75 percent, according to CMA data compiled by Bloomberg. A year ago, when there were eight nations, the total was $24 trillion, with America making up 38 percent.
Bank of America Merrill Lynch’s AAA Rated Global Fixed Income Index contained 3,597 securities with the highest ratings as of April 30, down from a high of 5,331 in December 2007, the fewest since November 2005. Dollar assets make up 65 percent of the index, up from 56 percent in 2008.
Hungary’s central bank is among reserve managers diversifying foreign-exchange holdings as the credit quality of European assets declines. The central bank said it will include dollars, yen and British pounds in its reserves, currently invested exclusively in euro-denominated securities.
“The number of euro-denominated assets that meet our quality standards has dropped radically,” Magyar Nemzeti Bank President Andras Simor told reporters on May 14 in Budapest. “More and more securities were dropped from our portfolio as the credit grade of more and more countries fell below the single A category and as more and more securities don’t meet our market quality requirements.”
…
Why shouldn’t they just print until they own everything?
Seriously — what constrains the Fed from printing and buying whatever it wants, then later making whatever is hidden under its balance sheet available to Megabank, Inc at fire sale prices?
Seriously — what constrains the Fed from printing and buying whatever it wants, then
The only constraint is political.
If they are viewed as abusing their position TOO badly, then their charter might get removed, or re-written in terms that they don’t like as well as the current terms.
Me confused. Doesn’t quantitative easing by the Fed, which amounts to asset purchases in order to bury them on the Fed’s balance sheet, automatically shrink the amount of assets on the market?
As long as you’re confused but willing to be plowed like every other working stiff the dollar will maintain it’s market value. When the party is over, and you discover that you have to walk home, the dollar will crash big-time.
It seems cheap credit is a concern for the Hong Kong property market.
Luckily, it’s different here in the U.S.A.
Hong Kong Warns Of Rising Property Market Risks
Published May 27, 2012
Dow Jones Newswires
Hong Kong Financial Secretary John Tsang on Sunday warned of rising risks in the local property market amid global uncertainties, in particular the crisis in the euro zone and the weakness of the U.S. economy, as low interest rates threaten the stability of the city’s housing market.
“Hong Kong’s real estate market is between ice and fire,” Tsang said in a post on his blog, referring to the global economy and the city’s cheap credit environment. Property prices have been rising rapidly since February, and last month they were up 8% from December and 13% above the levels of the 1997 property market boom, he said.
The surge in local property prices has been partly fueled by low interest rates and liquidity, Tsang said. “That’s very unhealthy against the context of a weak global economy,” he said, adding he is concerned about a property market bust if the global economy slows further or interest rates increase.
“The government will stay vigilant. I won’t hesitate to launch measures, when necessary, to keep the property market healthy and stable,” he said.
…
May 28, 2012, 1:32 a.m. EDT
Drooping Chinese credit signals inflection point
Recent data suggest slump in loan demand may be here to stay
By Wen Xiu and Huo Kan
BEIJING ( Caixin Online ) — Orders are down, raw material prices and unsold inventories are up, and overseas markets are looking bleaker by the day.
So uncertain is the business environment that many export-oriented Chinese manufacturers can think of nothing more than short-term survival. Borrowing from a bank for new investment is the last thing on their minds as the second half of 2012 gets under way.
“For some companies,” said one bank official, “just getting through the winter was good enough.”
Cooling demand for expansion-oriented loans has been mirrored, for example, by the downward trend since February in the one-year Shanghai interbank offered rate. The Shibor for bank-to-bank loans declined to around 5.1% in late April from nearly 5.24% just three months earlier.
Technically, commercial borrowing is still very much alive: A central bank report said growth of fixed-asset investment loans from banks reached 649.6 billion yuan ($102.5 billion) in the first quarter, 209 billion yuan less than the same period last year. Businesses alone borrowed an extra 277 billion yuan during the first three months compared to the same period last year.
And at the end of March, the central bank said, the nation’s financial institutions had 57.25 trillion yuan in outstanding loans on their books — up 15.7% from same period 2011.
Yet a closer look at the lending landscape reveals an undercurrent of pessimism. The sliding Shibor, for example, is a sign that banks have stepped up interbank deposit activity in the face of weakening loan demand.
Much of the money borrowed in recent months, for example, has involved short-term notes issued by banks, payable within a year. In March, nearly 71% of the 1 trillion yuan in new lending involved note financing and short-term loans.
“Because banks are reluctant to make long-term loans, or don’t have enough long-term lending projects that meet their conditions, note financing is being used to meet quotas,” said a corporate lending department source at a major bank. “It’s much like the situation in the first half of 2009.”
At this time last year, the source said, banks tried to make more room for loans. This year, they’re doing the opposite.
First-quarter note financing rose to the highest point since 2009 to 257 billion yuan.
Real estate-related lending has been soft as well, reflecting a two-year campaign by the government to control new-home prices and limit speculation. A bank loan manager said mortgage demand and bank willingness to lend are falling. Another bank executive said personal loan demand is down, too.
…
With so many too-clever-by-half all-cash buyers snapping up U.S. homes with plans to rent them out, it sounds like a glut of cheap rentals may keep rents affordable for decades to come. Why throw away money on ownership now, with the prospect of cheap rentals available for the indefinite future?
So What’s Stopping The Housing Recovery?
May 28, 2012
Housing sales have bounced in the last couple of months, but there’s uncertainty about what the bounce actually means. Sales of houses were up nearly 10% in April compared to April of last year.
The crazy thing? Right now, even with insanely low interest rates, the bump is being mostly caused by a jump in cash purchases, according to Fortune:
The problem is that the government can’t magically make housing prices go up in the middle of a bear market — they can only slow down how fast the prices fall, dragging the impacts of the market out while creating malinvestment bubbles and costing other parts of the economy an incredible amount of wealth.
Partly related, we’re also experiencing a heavy liquidity trap, where negative expectations are fueling the likelihood of a negative future, an almost textbook example of reflexivity in the real estate market.
That’s not all — housing prices are also seeing an impact from more foreclosures than last year, as I wrote about last month.
Add this to the fact that plenty of people just graduating college aren’t able to find jobs, much less make a mortgage down payment, and you have a recipe that leads to, well, our current housing situation.
What this means is that unless one of the above things changes, then things will likely just stay the same or only increase very, very gradually. We’ll know more about the next 10-15 years for housing after another year — we’ll be able to see if we’re in the middle of any sort of recovery, or if the fundamentals are actually getting worse.
I’ve been looking at housing deals myself over the last few months, but have decided to wait — at least for now. There’s more money to be made playing it safe than there is to be played jumping into a market too early.
…
OPINION
May 28, 2012, 6:58 p.m. ET
A Budget Grand Bargain Will Follow the Election
Early 2013 will offer the best political environment for critical fiscal reform.
By ROBERT RUBIN
Congress’s failure to reach a fiscal “grand bargain” last summer manifested the deep economic-policy divide separating Democrats and Republicans. Fortunately, the so-called fiscal cliff will soon create an extraordinary second opportunity for a breakthrough compromise.
Washington’s continued failure to get our fiscal house in order poses five basic risks. One, government borrowing risks crowding out private investment. Two, our unsustainable fiscal outlook undermines business confidence by creating uncertainty about future policy, economic conditions and our ability to govern, which in turn dampens investment and hiring.
Three, deficits constrain our capacity to make the public investment critical to competitiveness, growth and widespread income gains. Four, deficits hamper our financial ability to cope with economic weakness or geopolitical events. And five, our fiscal position creates a strong potential for some form of severe macroeconomic distress at an unpredictable time: high inflation, high interest rates and low confidence in the future that produce an extended period of slow or negative growth, or a harsh financial crisis.
Soon after November’s election several events will put serious pressure on both parties, possibly providing the impetus for a serious fiscal program. The critical decision-making period will be Congress’s lame-duck session after the election, and the first two or three months of the new Congress.
…
By ROBERT RUBIN
I wouldn’t read anything this financial termite has to say.
TRENDING: Romney: The world is ‘not safe’
CNN Political Producer Rachel Streitfeld
San Diego, California (CNN) - Speaking to an enthusiastic audience of several thousand on Memorial Day, Mitt Romney cast the presidential campaign as a choice between a candidate who supports a strong military and one who would shrink the defense budget and weaken the nation’s armed forces.
The presumptive GOP nominee underlined the urgency of his message by warning supporters the world was “not safe.”
…
Washington’s continued failure to get our fiscal house in order poses five basic risks.
” One, government borrowing risks crowding out private investment.”
Don’t make me laugh, interest rates across the board are at historic lows
“Two, our unsustainable fiscal outlook undermines business confidence”
No what undermines business confidence is the lac of customers. The middle class across the globe is dieing.
“by creating uncertainty about future policy, economic conditions and our ability to govern, which in turn dampens investment and hiring.”
I’ll give them #2 and #3, uncertainty about future policy exists all the time, this is trotted out by the corporatists.
“Three, deficits constrain our capacity to make the public investment critical to competitiveness, growth and widespread income gains. ”
True to a point, again we have a printing press. What we don’t have is a gov that uses the dollars it has to build our infrastructure and doesn’t use it’s power to affect the HUGE trade imbalances and policies that are destroying the middle class and our ability to produce goods.
“Four, deficits hamper our financial ability to cope with economic weakness or geopolitical events. ”
Already addressed about, the guy really has 4 points.
“five, our fiscal position creates a strong potential for some form of severe macroeconomic distress at an unpredictable time: high inflation, high interest rates and low confidence in the future that produce an extended period of slow or negative growth, or a harsh financial crisis.’”
Oooh they’ve conjured a Boogy man a “Severe economic distress at an unpredictable time” The guys who wrote this article and their pay masters are the same ones who said we’d have massive inflation and are likely the same ones who favor austerity. They’ve been wrong so now it’s severe economic distress at an unpredictable time. Austerity on the other hand will really allow us to predict when the crash will come so they are right on that. I predict that what we’ll have is a continued collapse in the middle class across the globe due to technology and the limits put on continued expansion by natural resources. When the FED starts handing checks out to the masses then we might see inflation, but my guess is they will continue to placate the dieing middle class and bailing out the elite.