Bits Bucket for July 29, 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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Bill In Los Angeles,
With all the rhetoric being thrown around here this last week, I would love to know what you mean when you’re talking to us about “communism” and “commies”?
Do you mean the communists like the ones that own all the multinational business concerns in Guangzhou and Shanghai? Or the gentle, laissez-faire hands of the government guiding the daily lives of the good citizens of Singapore and Switzerland? Seriously asking here because I’m sensing a total disconnect between your rhetoric and my reality.
Also, could you let us know what “commie” even means to you any more? Which countries would you say are “communist” according to your definition and why? And have you ever been to any of them?
Thanks for your clarifications.
a
A commie is one who pushes for more thug spending and insists the thugs should continue to steal from productive people and spread the wealth around to others.
p.s. I think in retrospect, I would have been for this Obamacare only if 1) the tax penalty is offset by tax cuts in other areas, 2) the government bureaucracy increase is offset by twice the elimination of government bureaucracy (numbers of regulations, numbers of government employees). But instead we get more communism.
Hong Kong, Singapore, Australia, New Zealand and Switzerland do have more economic freedoms, and as some of you pointed out yesterday all have socialized health care. Even Kuwait - my ex’s country has socialized health care, but she does not have to pay as much taxes as here in the USA because their overall government spending as percent of GDP is far lower than here.
It’s the Democrats here who refuse to acknowledge that government is too big and must be cut back. We have too much of a nanny state. The more security the less freedom. We go even more beyond that spending our money protecting non-US citizens and giving our producers’ money away to foreign countries as goodwill.
That is injustice and it makes my blood boil.
We need more government so that people like Graham Spanier can share their knowledge and skills to make this country better. While at it, let’s create another government position for Joe Pa.
Graham Spanier, ousted as president of Pennsylvania State University over the Jerry Sandusky child sex-abuse scandal, has taken a national-security job working with the U.S. government, a university spokesman said.
“Graham Spanier, ousted as president of Pennsylvania State University over the Jerry Sandusky child sex-abuse scandal, has taken a national-security job working with the U.S. government, a university spokesman said.”
Wow, access to the revolving door means he must be one of god’s children, and revolving door positions are SES pay grades too.
Must be the TSA.
http://thenewamerican.com/usnews/crime/item/11774-theft-pedophilia-murder-among-tsa-employees%E2%80%99-crimes
I seem to remember Kuwait was bailed out by our super expensive military.
“I seem to remember Kuwait was bailed out by our super expensive military.”
Kuwait and few other gulf states each ponied-up tens of billions, which allow us to modernize our equipment producing a fighting machine both feared and respected around the world.
I think this is where you misunderstand.
First, Congressional Republicans have been talking about cutting the deficit. They intend to do it by redistributing Social Security and Medicare spending to tax cuts for the wealthy and increased military spending. In the process, they will increase the deficit. I object to this plan.
If cutting the deficit is the objective, then spending cuts and tax increases are both necessary. If I believed that Congress would increase taxes on the wealthy, then I could support revising Social Security and Medicare payouts to decrease the burden on my children. I am not willing to throw away Social Security and Medicare so that Mitt Romney can pay less in taxes.
Second, necessary spending must be paid for by taxes (whether property, income, or tarriffs). Spending cuts are not sufficient to balance the budget. We disagree about what is necessary. You seem to believe that the market will take care of everything. I see that as wishful thinking that will lead to further unhealthy imbalances in society.
“I am not willing to throw away Social Security and Medicare so that Mitt Romney can pay less in taxes.”
I’m guessing FICA is either 0% or near 0% of the taxes Romney pays.
I’m guessing FICA is either 0% or near 0% of the taxes Romney pays.
+1. Another way he is not paying his fair share.
Sorry to butt in but I was late to the interesting exercise thread yesterday. Was busy exercising! So, maybe a bit lighter than defining what a commie is; does swimming count as cardio or strength?
Because every good libertarian needs 79 degree water, no? Would a communist country have country clubs? Forget bread lines; I’m talking lane lines! Do you share your lane with a slower swimming comrade?
Had a ocean swimming girlfriend once. She made iron men seem weak as they succombed to hypothermia(stroke count goes down; paddler pulls them from race). Too skinny to swim 2 hours without wetsuits in 59 degree Santa Cruz or other CA waters. An endurance sport w/ an emphasis on upper body strength lending itself far more to women is unique. Thanks, in large part(s) to their natural body compositions. Just a little levity to buoy you along as you are up against a tough question!
Calorie intake aside; does swimming in cool water make your body tend to store fat? Like, have you ever seen a skinny seal? Or will the calories in/calories out science of weight loss prevail over environmental and or genetic influences?
Or, is it the result of skinny seals dying out. I don’t think the swimmers physique is developed, rather people without swimmer’s physique do other things more suited to their body type.
She was slow as a snail runner, if I recall correctly.
I will “tread” through some of the seemingly nonsensical stuff, hopefully sarcasm, and try to answer the pertinent question.
Distance swimming is more a cardio exercise than strength. However I attribute my rapid development of my deltoids in my early 20s to swimming. And from there it plateaued.
There has been a lot of discussion about swimming and body fat. Turn on the summer olympics and see how many fat swimmers there are. Those swimmers tend to do sets of 50s and hundreds. Interval training. Look at the ones who focus on the fly. They are the most muscular. Even the women in that event are ripped.
Look at 40-something year old Dara Torres. She is ripped. She swam in a previous Olympics and got a silver at age 40.
However look at the 1500 meter swimmers. They are still thin. They are not as muscular. Just like track stars. Marathon runners appear gaunt and skeleton-like. Sprinters (albeit the drug-enhanced ones) got tree trunk-like legs and still have muscular upper bodies. Short races in any sport tend to be that way.
Interval swim training is a way to get the ripped swimmer’s body. If you swim three days a week, perhaps two of those days you focus on sets of 100s. First a warmup of 600 yards, then you do 20 100 yard sprints under a certain time per sprint. as you get stronger you will be able to move in the time limit and improve. Finish with 600 yards of cool-down. By sprint I mean going all out. Most recreational lap swimmers where I’m at just dawdle along. And I’m certainly not even half as fast as Michael Phelps!
If you only swim, you will not have a balanced body. You should work the legs and you need to do some bodybuilding as well to keep your bones strong. Jack LaLanne actually started getting joint pain in his later years so he turned to swimming but still lifted weights. But I think the best approach is to lift weights and then swim on the same day and finish all within 2 hours. On alternate days focus on legs. Brisk walks on the treadmill or use the cross trainer and let the upper body muscles recover. If you gotta be in the pool, use fins and a kickboard and just kick on those alternate days. You can do interval training still with the legs in the pool.
Thanks Master. Please excuse my blah blah blah
The ex was so into masters, she would double AM and PM.
She had beefy shoulders like a man. Her best event was the 6mile open ocean swim. A gazelle she was not; however she did interval training with her master’s group which would account for the beefing.
Pardon my sarcastic tone; unintelligible cryptic blathering(hey its the internet and I don’t “do” emoticons), I do appreciate the detailed answer.
So, Bill. Thanks for telling us even more about your chlorine workouts and of course, those fabulous delts.
But the question was: How do you define the word “communist” that you bandy about so freely? (And what countries do you think qualify as such?)
Mexico and the Sudan are full of “thugs” bent on “redistribution”, but I’d hardly say they qualify as communist. More like laissez-faire capitalism, right? Survival of the fittest and all that…?
See my post above on what I define by communist. Time stamp is 08:08:22
Unfortunately, your internalized made up definition is not the scientific definition.
From Dictionary.com
com·mu·nism [kom-yuh-niz-uhm] noun
1.
a theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state.
2.
( often initial capital letter ) a system of social organization in which all economic and social activity is controlled by a totalitarian state dominated by a single and self-perpetuating political party.
Here’s Websters:
com·mu·nism
noun \ˈkäm-yə-ˌni-zəm, -yü-\
Definition of COMMUNISM
1
a : a theory advocating elimination of private property b : a system in which goods are owned in common and are available to all as needed
2
capitalized a : a doctrine based on revolutionary Marxian socialism and Marxism-Leninism that was the official ideology of the Union of Soviet Socialist Republics
b : a totalitarian system of government in which a single authoritarian party controls state-owned means of production
c : a final stage of society in Marxist theory in which the state has withered away and economic goods are distributed equitably
d : communist systems collectively
See my post above on what I define by communist.
It was a definition reflecting the thought process of a 12 year old who was pissed off at his parents because he thought he didn’t need them and didn’t like to do his chores.
My kids are definitely communists. They expect to get fed, and even complain if they don’t like what we feed them, but do no work in return.
Dang it. Where’d my post go?
“1. a theory or system of social organization based on the holding of all property in common, actual ownership being ascribed to the community as a whole or to the state.”
That definition appears to bear little resemblance to either the Chinese or the American version of The (Real Estate Investors) Ownership Society.
Are you sure? I read so many posts across the Internet about how we are now a socialistic/commie country thanks to Obama, that there must be some truth to the matter?
Right?
That definition appears to bear little resemblance to either the Chinese or the American version of The (Real Estate Investors) Ownership Society.
The Chinese PTB long ago realized that we had the superior economic model (in terms of enriching the elite), and thus started shifting to corporatism several decades ago.
“Most recreational lap swimmers where I’m at just dawdle along.”
I am pretty sure that what you would perceive as dawdling along is my full out sprint.
“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question it’s methods or throw light upon it’s crimes. I have two great enemies, the Southern Army in front of me and the Bankers in the rear. Of the two, the one at my rear is my greatest foe.. corporations have been enthroned and an era of corruption in high places will follow, and the money powers of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed.”
Abraham Lincoln
and the money powers of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed ??
150 years later…Are we there yet ??
Are we there yet?
Let’s see
1. Elite paying 10% or less effective tax rates, ie much less than upper middle and middle income. Check
2. Elite controlling their own bailout when their ponzi scheme goes bust. Check
3. Elite controlling gov so there is no regulation or prosecution of their crimes. Doing away with Glass Steagle allowing unregulated securitization and conflicts of interest with rating agencies. Allowing oligopolies and monopolies. Check
4. Elite controlling Supreme Court and getting things like Citzens United check
5. Elite controlling both presidential candidates check
6. Elite controlling more and more of the wealth generated by the country. Check
Yep we are there.
“Yep we are there.”
+1 Been there for some time too.
Hi. Did not realized that “elite” was a tax bracket. Fact is that the top portion of federal taxpayers pay a disproportiate share of federal income taxes. Approximately 50% of taxpayers paid no federal income taxes. (Top 10% of taxpayers paid 70% of the taxs. (http://ntu.org/tax-basics/who-pays-income-taxes.html)
Fact taxes are paid in DOLLARS not rates. Take Mitt Romney since his taxes seem to be a hot topic. For the most recent year for which he releasesd returns he paid over $3 MILLION in federal taxes. Never enough for tax and spend liberals*. Hardly a day goes by that there is not a news story about waste fraud and abuse in government spending. (That’s the nature of bureacracy, public or private.) Latest example tuition re-imbusements for the Wash, DC Metro system. (http://www.washingtontimes.com/news/2012/jul/26/college-takes-some-metro-workers-for-off-the-rails/?page=all) But if we cut government spending and taxes the sky will fall, people will starve in the street, and no doubt the world probably end. More likely someone like my very nice neighbor who is a federal lawyer will not get to go to legal conventions in Switerland. Yet taxpayers in a deep deep recession were send people to conventions in Swizterland.
*Recently rebrand to “progressives.”
top portion of federal taxpayers pay a disproportiate share
I don’t give a flip what they pay. What really counts is what they have left over.
Take Mitt Romney since his taxes seem to be a hot topic. For the most recent year for which he releasesd returns he paid over $3 MILLION in federal taxes.
Since you bring it up, that’s a great example.
Mitt pays a total tax RATE that is much lower than the rate that I pay. Mitt’s 2011 effective tax rate was 15.43%. Mine we 23.28%. In other words, his effective tax rate is only two-thirds of mine.
With the millions that he makes (and I don’t), I think Mitt could afford to pay the same rate that I do.
BTW, Anon, you always pipe up to defend the extremely wealthy whenever the subject of taxes arises.
So I’ll ask you straight out: are you a paid contributor to this blog? In other words, is posting here part of your job that you get compensated for? I’m just curious.
he paid over $3 MILLION in federal taxes ??
And what percentage of his NET income was that may I ask ??
Because, you see, if someone making $100,000. of net income paid 35% of it in tax, that would leave them with $65,000…
On the other hand, if Romney paid 15% tax, that equaled $3-mil, that would mean that he is left with a measly $17,000,000. to try and get by on….
So, who is it of these two may I ask that is making the biggest sacrifice ?? Or, said another way, which one is paying their fair share in relationship to what they retain ??
P.S. How do you get 100-mil in a IRA ??
The point Anon is making that percentages are misleading.
How many more services does Romney get for his $3 million, than the citizen in your example for $35k (although there is no way that person pays $35k)?
I understand your point…that if you CAN pay more, you should. The counter argument is that if you (as a rich person) are bearing the brunt of any new cost, you are hyper-sensitive to waste of those tax dollars.
I know quite a few wealthy people who would be willing to pay more in taxes if it was part of a comprehensive deficit reduction program. None of those people want to pay more without that plan.
Here is the answer to your IRA question…how does an entrepreneur turn a minimal capital investment into a company into billions in that company’s stock? Bill Gates, Sergei Brin, etc. Same story with Romney–he likely invested a minimal amount of money into an entity that generated huge profits.
And what percentage of his NET income was that may I ask ??
That’s easy: it was 15.43% of his AGI.
“Fact is that the top portion of federal taxpayers pay a disproportiate share of federal income taxes. ”
That IS NOT a fact.
These are the facts:
http://www.irs.gov/pub/irs-soi/09in12ms.xls (that says “IRS.GOV)
Column “CA” (far right)
The middle class pay the most taxes.
The only 50% not paying their fair share is:
http://www.reuters.com/article/politicsNews/idUSN1249465620080812
“The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.”
Now can we stop the lies?
Did not realized that “elite” was a tax bracket.
Yes you did.
the top portion of federal taxpayers pay a disproportiate share of federal income taxes.
Maybe because they MAKE a disproportionate share of the income. Crazy huh?
50% of taxpayers paid no federal income taxes.
Those 50% of taxpayers pay a higher percentage of their income in total (all) taxes than Mitt Romney.
Wait. ntu.otg?
Are you kidding?
James Dale Davidson?
You really should do some research on those 2. “Laughable references” is being polite.
I’m going to beat the drum again:
The only reason that Romney paid such a low tax rate is because so much of his income came from capital gains. This is a tax code issue, not a Romney issue.
Simpson Bowles’ plan deals with this.
Make capital gains rates and ordinary income rates the same.
No need for a special Buffett Rule. No need for complications with partnership tax law (carried interest legislation). Don’t make things more complicated, make them simpler. All income, regardless of source, goes into one bucket.
Add on top of that the study that someone recently posted here by a Berkeley economist that concludes that the main reason for the tax code becoming less progressive is not low income rates for the wealthy, but low capital gain rates and corporate loopholes, and there is even more justification for making this change so that capital gains rates are the same as ordinary income.
Simpson Bowles, Simpson Bowles, Simpson Bowles…will anyone have the guts to push the plan forward?
RW said: “Make capital gains rates and ordinary income rates the same.”
Good luck with that. That means increasing the cap-gains tax rate, and it seems that half of the nation rises up like 1000 suns of vengeful fury and screams over and over that you’ll kill investment, that you aren’t a job creator, that you hate success, and the like.
And for most of those people, for whom capital gains are seldom addressed, it’s solely an issue of them planning on making a big capital gain on their house or stocks, yes sir! Any day now, that ship will sail right into the harbor and they’ll be DAMNED if they’ll pay 23% on that $1 million instead of 15%. Communist! >8′[
Americans are becoming more retarded with each passing decade. God, this is getting horrible, and the media just goes along with it, feeding idiocy with predigested info-pap, commonly called propaganda.
Make capital gains rates and ordinary income rates the same.
I strongly support this approach. It add simplicity and at the same time makes the tax code dramatically more fair; everyone pays the same rate, regardless of whether it is “earned” or “unearned” income.
My personal preference is for a separate “buckets”, but the same tax rates applied to both types of income. In other words, even if you were in the highest bracket for your “earned” income, your first dollar of capital gains would be taxed at the lowest rate again. Or vice-versa.
But high wage earners, and high capital gains earners (like Mitt) would pay the same rates. That’s fairness.
“Make capital gains rates and ordinary income rates the same.
I strongly support this approach.”
Isn’t that a step toward Steve Forbes’ flat tax?
Isn’t that a step toward Steve Forbes’ flat tax?
I guess I don’t see it that way; you can had identical treatment for earned vs unearned, but still subject both to progressive bracketing. Flat vs progressive bracketing seems orthogonal to me.
That said, I’m not opposed to the idea of a flat tax either, really.
But I am definitely opposed to the vastly wealthy paying a lower rate than I pay.
“But I am definitely opposed to the vastly wealthy paying a lower rate than I pay.”
You and Buffett see eye-to-eye on that point.
Comment by oxide
2012-07-29 11:44:12
top portion of federal taxpayers pay a disproportiate share
I don’t give a flip what they pay. What really counts is what they have left over.
So Oxide I guess you consider all his (or any taxpayer’s) money the public’s money? And the public gets to decide what he keeps? What counts is what he has leftover? No what counts is the $3 MILLION he’s paid.
Oxide and Prime is Contained how much did each of you pay last year in federal taxes? Don’t give us rates. Share with us what you actually paid in dollars. DOLLARS are the unit of measure. Rates are a specious argument by spend and tax liberals.
Rates are a specious argument by spend and tax liberals.
Rates are what matter. And you know it.
Rates are a specious argument by spend and tax liberals.
This “taxes are paid in dollars” argument is the specious one.
The tax code specifies that taxes are computed in terms of RATES. The fact that the extremely wealthy can pay rates much lower than those of us who have to work for a living is inherently offensive.
The fact that you will continue to defend such an obvious injustice suggests strongly that you are engaging in the task of disseminating propaganda for a fee. Please confirm or deny that you are paid to contribute to this blog.
Since you are the one advocating for showing personal information, why don’t you start with your AGI and effective tax rate? As of this moment, you have shared less information than I have.
Comment by ecofeco
2012-07-29 13:55:01
“Fact is that the top portion of federal taxpayers pay a disproportiate share of federal income taxes. ”
That IS NOT a fact.
These are the facts:
http://www.irs.gov/pub/irs-soi/09in12 ms.xls (that says “IRS.GOV)
Column “CA” (far right)
COLUMN CA is single taxpayers only. Columns B through N are “ALL RETURNS” They show that those with AGI of $200K and north collectively pay the majority of taxes.
All returns? AGI? OK.
From column N (sub col 13) (All Returns, Total income tax, Amount, AGI)
$0 to $200,000 = 431668299 (N10 thru N21)
$200,000 to $10,000,000+ = 434280398 (N22 thru N28)
Well north?
“corporations have been enthroned and an era of corruption in high places will follow, and the money powers of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few”
The more things change, the more they stay the same.
Great quote
Agree.
I have two great enemies, the southern army in front of me and the financial institutions, in the rear. Of the two, the one in the rear is the greatest enemy.
Misattributed
Attributed to Abraham Lincoln. Not found in Lincoln’s works. This earliest this quote has been found is 1941.
wikipedia
Ben Jones often makes the claim that; “Bubbles always burst.” Without even attempting to define either of the terms, “bubble” or “burst”.
Can anyone here help him out?
Whilst I don’t doubt that the vast majority of bubbles do in fact burst, i’m not convinced that 100% do and I’m particularly interested in that tiny fraction which may not burst - the way that Rutherford’s famous gold foil experiment redefined the nature of the atom.
If it doesn’t burst it wasn’t a bubble.
‘Without even attempting to define’
Since 2004, I’m pretty sure we’ve covered these things. I prefer financial mania, BTW. It’s just that bubble is what most people use and understand.
Ben…From your post yesterday;
‘If rates were at 5, 6 percent, I don’t think we’d be seeing such an urgency among buyers”…..
No doubt about it IMO….And, it would be my bet that it will cause the most havoc in the future in the high cost housing markets due to the shear leverage that has been taken on…
Interesting side note I would like to share…
My son and about three dozen other friends are rafting on the Truckee river this weekend…We were talking the other day and he shared with me the conversations that are being had regarding housing with this group…He said the consensus is that they will stay near the job market but only rent…They will buy something in some other low cost area that they perceive would be a place they could live long term (one couple is buying in Arizona)…Due to low cost and low interest rates, they plan on purchasing on a 15 year fixed rate and renting the house…They will cover the negative cash flow and try and even be more agressive in the amortization of the loan and try to pay it off in 10 years…Once paid off, they are bailing out of the valley…They figure with a home free & clear, that a reasonable paying job should be more than enough to have a decent quality of life…This group is between 28-35….
I have a paid off house. It is the reasonable paying job here that is hard to come by. Something with benefits would be key; otherwise something even with decent wages; well it hardly floats the boat.
You may have chosen the wrong place to find a “reasonable” job Mike…Bend is a destination resort area although I know it does have some industry…I think a plane manufacturer…If you located lets say in Sacramento or nearby…There you could find the combination of inexpensive housing and a decent job…
I wilt in the heat; Although hot now, Bend is chilly most of the year; plus the sleeping temps are cool even midsummer.
One thing working p/t as a teacher here; if I had bennies $20/hr would be decent; as most river guides/hospitality folks do their seasonal jobs for $10/hr. They are young ski bums though.
But, I know it is possible that relocation is in the cards for us. So fire up the A/C! We’re coming thru mid august to see family in San Mateo to Santa Barbara. I’ll see how I acclimate to the 5 corridor then reconsider.
My brother lives in a much lower cost of living location. We frequently talk about where we will live in our retirement.
HIS point to me:
If we both save the same percentage of our income for retirement, I’ll have more choices than he will.
When the time comes for them to give up the pay in Silicon Valley for a hotter, cheaper climate with lower pay, will they?
If we both save the same percentage of our income for retirement, I’ll have more choices than he will.
True; you will be able to engage in cost-of-living arbitrage by moving to a cheaper location if you should choose to do so, and he will not be able to do so, since he already lives in one.
I live in a lower cost of living area, and save a greater percentage of my income than when I lived in the higher cost area.
I live in a lower cost of living area, and save a greater percentage of my income than when I lived in the higher cost area.
But you have done an atypically-good job of reducing your expenses, and your professional expertise allows you to earn an income that is much higher than what would typically be available in the low-cost area—isn’t that right?
Not that I mean to take anything away from your accomplishment, though; I hope to emulate one day.
Did you catch this insidious lie folks? Think it out. The Rental Pimp is asserting that prices won’t be halved or more.
Guess again. Prices have a long way to fall across California.
You have to pay attention to the lies of people like Rental Pimp.
Prime-Is-Contained:
You are missing the point (or choosing to ignore it). My brother can ONLY move to another low cost of living location. I will be able to move pretty much anywhere (low, medium, or high cost of living).
RAL:
What are you talking about? Where do I assert anything about home prices?
If it inflates like a bubble, hisses like a bubble, and pops like a bubble, IT’S A BUBBLE.
Great definition, PB!
Although I will note that both Ben’s definition and your includes whether it pops as a key criteria in whether it was a bubble.
If that is truly the case, that bubbles can only be spotted in the rear-view mirror, then we aren’t too far off from Greenspan’s position that they can only be identified after the fact, and thus by definition cannot be prevented or headed-off early.
I didn’t say it wasn’t a bubble if it didn’t pop.
and pops like a bubble,
I took the conjunction “and” to be the boolean AND operator; in other words, if all of the pre-conditions were true, then it was a bubble.
Sorry if I mis-interpreted; was it intended to be read as an “or”, such that any of the pre-conditions were true it would be a bubble?
I provided sufficient conditions for a bubble, not necessary ones.
I provided sufficient conditions for a bubble, not necessary ones.
So any one of them will suffice, then. That would make your “and” a logical-OR operator.
(PiC, releasing my inner pedant today.
What about bubbles in amber?
Suggested reading:
“When Bubbles Burst”
World Economic Outlook
International Monetary Fund, April 2003
Prof, great resource - I’d never have found it without your reference. Thank you!
Jojo:
This being a forum entitled “The Housing Bubble Blog”, you’re probably wondering about the housing bubble.
House prices vary directly with the amount of debt the homeowner can take on in order to purchase the house. The more debt a buyer can take on, the higher the price he can pay to the seller. Cash buyers are competing with those taking on mortgages.
Separating lenders from repayment risk allowed them to make ever larger loans without risk to themselves, allowing house buyers to raise ever higher amounts of money to buy ever more expensive houses. Lenders were separated from repayment risk by their ability to sell off loans, an ability created by the “securitization” mechanism. Buyers who purchased prior to securitization paid lower prices as the amount of money they could raise was limited by their ability to repay. Lenders held onto the loan and collected interest, and so were very interested in having the buyer be able to repay. If the buyer could not, they lost money.
Post securitization, lenders were able to separate themselves from repayment risk. As securitization fully matured, lending standards degraded completely as the market for safe, high-yielding mortgage debt was insatiable in a low interest market. And as a result, the size of the mortgages became ever larger, coinciding with higher prices. Of course, the debt was not safe.
So, today, what we’re seeing is the government supporting the market by continuing to purchase and insure questionable loans. There has been some improvement in loan quality but FHA-insured loans still have high default rates.
Going forward there are three factors which will impact house prices: How much debt can an individual manage. This is not a mystery, nor was it ever. The housing bubble merely reinforced what these debt levels were.
Second, what quality of mortgage debt will the government purchase/insurance. As long as it can pay back bad debt that it has bought/insured, it will do so. With debt being 100% of GDP, the question is how long can this subsidy to Wall Street continue and what will ultimately be its long term, steady-state form?
Will the Wall Street subsidy gain the same staying power as farm subsidies? That is, IMHO, the primary question which will guide the future direction of house prices.
Third, what will be the inflation picture? High inflation leads to higher prices of everything, including houses.
I think the post above is spot on.
That said, securitization was not the problem. Complete lack of proper underwriting allowed by securitization and supported by the ratings agencies was the problem. It is for this reason that strong QRM requirements under Dodd Frank are a necessity.
If what banks are selling are pools of loans where all homes were purchased with a minimum down payment of 20%, a bubble would have a hard time being formed. Overall, securitization is here to stay, and will generally lower the cost of borrowing as compared to a world without securitization.
My fear is that the 2 most important pieces of the Dodd Frank legislation, the Volcker Rule, and QRM requirements will end up being toothless, and thus nearly worthless, and what we end up with is a massive new set of rules that ends up slowing capital investment without decreasing systemic risk.
Complete lack of proper underwriting allowed by securitization and supported by the ratings agencies was the problem.
If securitization was the cause that led to the lack of standards, then securitization was the problem.
Sure, we could find some way to ensure standards via other means than self-interest, such as a regulatory requirement for a 20% downpayment. But considering how poor a track record we have of maintaining good regulation over time, the requirements would likely erode, making us vulnerable to a similar situation in the future.
Maybe it would be safer to just outlaw securitization.
Securitization was not the cause of the poor underwriting standards.
Greed (on behalf of banks), laziness (on behalf of investors), and incompetence (on behalf of rating agencies) was the source of poor underwriting. Securitization enabled greed, laziness, and incompetence to prevail.
Securitization is fundamentally a way to diversify risk. It is a sound investment principal. If you were a lender (or investor in debt), would you prefer to own a single loan for $100,000 on an asset worth $125,000, with proper borrower underwriting? Or 10% each of 10 identical loans, each with the same LTV and underwriting? Securitization allows the latter to be possible.
“Securitization is fundamentally a way to diversify risk. It is a sound investment principal.”
Securitization + TBTF = shitty assets
Securitization was not the cause of the poor underwriting standards.
Securitization was the direct cause of the poor underwriting standards.
Securitization inherently means the one making the loan is selling it, and thus passing all of the risk down-stream.
The party doing the underwriting holds none of the risk of the loan performance after selling it down-stream. That is THE crux of the problem. It means that the underwriter does not pay the cost if they are wrong, and thus has very little incentive to do a good job. Thus standards suffer.
Securitization: The modern day equivalent of the tragedy of the commons.
Securitization: The modern day equivalent of the tragedy of the commons.
Ooooo, well put, jane!
Lenders were able to separate themselves from repayment risk. At that point, the way they made money was by generating a paperwork package and calling it a mortgage. They sold the paperwork, collecting a tidy commission. It’s a fabulous way to make money. On a par with just firing up the laser printer and printing it.
The mechanism which allowed lenders to separate themselves from lending risk was securitization.
The ability to sell off a loan is always going to create a perverse incentive to generate bad debt. Why? Because the way to make money is not from checking the ability of the borrower to repay. That checking process is pure cost - a waste of time and money - with no benefit. The profit comes from generating as many loans as possible for as large an amount as possible.
Until lenders are forced to retain repayment risk, toxic debt will continue to be injected into the system. Toxic debt which the taxpayers will be forced to pay off. The Wall Street subsidy.
“Will the Wall Street subsidy gain the same staying power as farm subsidies? That is, IMHO, the primary question which will guide the future direction of house prices.”
I see no mention here of the amount of money thrown down the GSE subsidy rat hole.
Health, housing get greatest federal subsidies
Associated PressBy ANDREW TAYLOR |
Associated Press – Tue, Jul 24, 2012
WASHINGTON (AP) — A study of federal subsidies of various sectors of the economy released Tuesday says that health care and housing combined to reap almost $1 trillion in support in the most recent year for which data was available.
The study funded by the Pew Charitable Trusts said that taxpayers subsidized health care by $743 billion in 2010, while a set of generous tax breaks was the main driver in $227 billion worth of subsidies for the housing industry.
The Pew study says that various federal subsidies like tax breaks, federal grants and other government contracts totaled $1.4 trillion. It shows that much-criticized subsidies for farmers and producers of clean energy are relatively small compared to those propping up the health care and housing sectors.
The group says $460 billion of the subsidies come as tax breaks like the mortgage-interest deduction. Such breaks are called tax expenditures, which are defined as spending that’s done through the tax code.
…
In housing, the study found that federal spending comes more in the form of tax breaks like the mortgage-interest deduction and tax-free capital gains on home sales than from grants like rental vouchers for the poor.
…
Realtors and Liars(one and the same) frequently make the claim that “housing is an investment”.
Why are realtors lying to the public about housing?
They are not lying. Housing is an investment. It’s just not necessarily a good investment, depending on price, terms and condition. If you paid the 2002 to 2007 prices, it was a terrible “investment”, but it was an investment, nonetheless, most usually made with LEVERAGED finance.
Not at all Dio.
Investments have the possibility to net a profit. Buying a manufactured item and using it results in depreciation and loss.
Given the lingering mortification over Spanish bailout prospects, what has sent Wall Street bulls into rally mode the past couple of days?
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IMF Pessimistic About Spain
Posted: July 28, 2012 at 9:47 am
Less than a day after Spain disclosed that its unemployment rate reached 24.6% in the second quarter, and just weeks after its neighbors agreed to bailout of its troubled banks, the IMF issued an extremely a pessimistic report on the southern European nation. The report said nothing that the international capital markets have not already expressed as they exit Spain’s sovereign debt at a pace which has caused the country to pay interest rates above 7% on two-year notes.
…
what has sent Wall Street bulls into rally mode the past couple of days?
Why, the increasing chance of dollar-debasing QE3…. of course.
But you knew that already.
My wife hates roller coasters; I confess to enjoying them myself.
July 29, 2012, 7:45 p.m. EDT
Asia readies for QE3 roller coaster
Commentary: Hong Kong’s currency peg back in spotlight
By Craig Stephen
HONG KONG (MarketWatch) — Asian investors would be advised to strap in for the usual roller-coaster ride, as more signs emerge that the Federal Reserve is preparing for another round of stimulus.
Quantitative easing (QE) in the U.S. has typically been a recipe for higher prices in Asia, and a signal for investors to seek refuge in hard commodities or currencies. For Hong Kong, with its pegged exchange rate, the result is invariably an inflationary and asset-price surge — particularly unwelcome when property prices are at all time highs.
According to Bank of America Merrill Lynch we can expect the Fed to launch a $600 billion round of QE at its September meeting. For Asia, they say the impact is usually far more visible on inflation than growth, largely via higher commodity prices.
They also note that, with previous rounds of QE, Asian currencies such as the Taiwan dollar, Korean Won or Singapore dollar have tended to strengthen against the greenback.
While there is still some second-guessing on QE3, the market already appears to be looking past China’s growth scare and at the prospect of new stimulus.
…
It’s Sunday! Go snap ya a house up!
A better idea would be to learn to fly, become an expert on small aircraft, and buy yourself a small plane and move some of your assets to foreign countries.
a small plane and move some of your assets to foreign countries ??
And what country would it be that you suggest we fly this small plane to ??
Design that off-shore nationless ship we talked of yesterday to be an aircraft carrier and land the plane there.
Take your pick. If you fly out from Florida you got a lot of choices in the area. If you fly out from San Diego you choose from Central America. I wonder if Aladinsane considered it?
Some planes sell for under $50,000.
I was told by an anonymous blogger that it is treasonous to move your assets out of the U.S.
I don’t see any difference in hiding your wealth from any human being, whether or not that person calls himself “the government.” I was born in the U.S. I did not sign any contract to get this big government that is far bigger than in 1959. I voted against every bond proposition and every proposition that increased taxes. I voted libertarian for years. I do not have a moral obligation to acquiesce. I am not impressed by mob rule. If a mob votes to rob me of more of my money, that does not make me obligated to acquiesce.
Of course as a disclaimer, I cannot do this while in my same career, as my finances are under a microscope. I go through a lot of background checks. For most people, they can have financial privacy if they really want it. I have 0 financial privacy.
“… I have 0 financial privacy….”
And you think you’ll have more in Singapore? Place is like Big Brother on roids. And CH is like Big Brother with a dust pan. Unless you have enough $ocked away to party with the Majors, you’re meat to those banks. Just ask Mitt.
Pssst: Lew Rockwell is after your money.
“Place is like Big Brother on roids.”
Spitting out your gum on the sidewalk is punishable by caning.
I did not sign any contract to get this big government that is far bigger than in 1959.
I didn’t sign a contract to kill 100,000 Iraqis either.
Either suck it up or start your own country. Or at least stop taking contractor money from this government that you clain to hate so much, you preening bragging hypocrite.
Or at least stop taking contractor money from this government that you clain to hate so much, you preening bragging hypocrite.
I find this line of argument no more convincing that I find the same argument given by the far-right, that Buffett should not advocate for higher taxes unless he is already paying them voluntarily. Both are equally specious.
People are going to do what is in their self-interest within the existing set of rules/opportunities, even if philosophically they would prefer to see a different set of rules/opportunities.
Oxide is irrational so she can be excused.
I work for my own rational self-interest within the framework I am expected to work. If I was in Soviet Russia I suppose I would be expected to starve since otherwise I would be a hypocrite there.
And I have to whip this out for her because she is one of those with a memory the same span as the life of a common house fly:
http://www.lewrockwell.com/rothbard/rothbard63.html
“Living in a state-run world” which is what I am doing.
as my finances are under a microscope. I go through a lot of background checks
You’ve really chosen to walk-the-walk of a libertarian.
When you going to live it?
You choose a career AND employers that require extensive background checks and it’s… the GOVERNMENT’S FAULT?
Seriously. No, seriously.
“I didn’t sign a contract to kill 100,000 Iraqis either.”
7 times worse than that Oxy. It was 700,000 human beings killed in Iraq.
I work for my own rational self-interest within the framework I am expected to work.
A common war crimes defense.
“People are going to do what is in their self-interest within the existing set of rules/opportunities, even if philosophically they would prefer to see a different set of rules/opportunities.”
Not true.
I never go home wondering if what I am doing is right. And I didn’t start in education.
In that same article, Dr. Murray Rothbard mentioned his work at a private university and mentioned he would not be surprised if many of his university’s funds came from governmennt:
“There is nothing wrong, and everything rational, then, about accepting the matrix in one’s daily life. What’s wrong is working to aggravate, to add to, the statist matrix. To give an example from my own career. For many years I taught at a “private” university (although I would not be surprised to find that more than half its income came from the government). The university has long teetered on the edge of bankruptcy, and years ago it tried to correct that condition by getting itself “statized” through merging with the State University of New York system, in those halcyon days rolling in dough. For a while, it looked as if this merger would occur, and there was a great deal of pressure on every member of the faculty to show up in Albany and lobby for merger into the State system. This I refused to do, since I believed it to be immoral to agitate to add to the statism around me.”
I know you are an educator. Well, so are many anarchist libertarians such as the late Dr. Murray Rothbard. It does not mean you must sanction the nanny state.
Eco, Alpha, et al - you freshmen are pathetic.
A common war crimes defense.
I’m afraid I am going to have to invoke Godwin’s Law, and this thread is terminated.
Freshman? That’s it? That’s all you got?
Godwin’s Law
No mention of Hitler or Nazis. Fail. Next.
No mention of Hitler or Nazis. Fail. Next.
It was vague, but I took your comment as a subtle invocation of them.
If I made that inference incorrectly, name some non-Nazis who used the defense at a war-crimes trial. After all, you said:
A common war crimes defense.
And you were right—it was a common defense… at the Nuremberg Trials.
And you were right—it was a common defense… at the Nuremberg Trials.
It’s one of two defenses used by pretty much everyone charged with war crimes. The other is “you’ve got the wrong guy”.
Does Godwin’s law have a corollary about people calling something/everything communist or socialist? No?
Then it’s not much of a ‘law’. Fail. Next.
Does Godwin’s law have a corollary about people calling something/everything communist or socialist? No?
I nominate this to be “Sloth’s Law”. It is a fantastic idea.
I would dearly love to see every thread that uses those words terminated. I would also suggest that we add “thug” to the list…
I would think that the plane idea is not very good, unless your assets will fit into a couple of suitcases.
Checked the gross load capacity of a small aircraft?” It ain’t much.
My assets would, but then nobody would much mind if I took them all with me.
Would eliminating the mortgage interest deduction possibly work here in the U.S. to convince international financial markets that we are on the path to eliminating drags on economic growth? If it works in Spain, it might be worth trying here, too.
Shoppers in Cádiz, Spain: the government needs to reduce the deficit and boost growth, according to the IMF (photo: Saez Pascal/SIPA)
SPAIN’S ECONOMY
Spain Needs to Deliver on Reforms to Stabilize Economy
IMF Survey online
July 27, 2012
Key goals: make the economy more competitive to boost growth, clean up the financial sector, put public finances on a sustainable footing
Labor reforms should aim to put more people back to work
IMF will monitor financial assistance to Spain’s banks
…
IMF Survey online: Financial markets don’t appear convinced by the reforms already taken by the government—what more can they do to restore investor and market confidence?
Daniel: Spain’s plans are good, it now needs to deliver. The country has passed many reforms and made many commitments, and now the government needs to deliver on them so the results can be seen. For example, it’s not enough to announce ambitious fiscal deficit targets, especially as in the past these targets were missed. The government now needs to hit these targets. Actually, it should be trying to surpass these targets, to generate good, not bad, surprises.
The recent package of measures, which includes raising the value-added tax from 18 to 21 percent and the removal of the mortgage income tax deduction, is encouraging in this regard. These are measures well designed to minimize the drag on growth.
…
Simson/Boles includes elimination or severe restriction of the MID…Although I think Obama will win in November mainly due to his embrace of the Ryan plan (AARP will be out in force) no matter who wins in November, watch for this legislation to pass in some form…
NPR better learn to avoid stories like this one, or the NAR may pull their support.
Why Does The Mortgage-Interest Tax Deduction Still Exist?
Categories: Radio, Housing
02:56 am June 6, 2012
by Alex Blumberg
Listen to the Story
Morning Edition
[4 min 0 sec]
The mortgage interest deduction sounds like it helps American homeowners, but does it?
Enlarge Alex Brandon/AP
This is the latest story in our series on money in politics.
If you have a mortgage on your home, you can deduct the interest from your taxes. It’s a popular, well-entrenched policy. But according to one policy adviser to a U.S. senator, “the mortgage-interest deduction, from a purely policy perspective … makes no sense.”
It’s a view that’s supported by a mountain of academic research: The mortgage-interest tax deduction benefits the rich more than the poor, has little effect on home ownership and isn’t even really a bargain for homeowners because it raises home prices.
So do policy advisers tell members of Congress to fight the mortgage-interest tax deduction?
“If you’re relatively green in Washington, I suppose that happens. And I suppose you’re laughed at,” said the adviser, who preferred not to give his name for fear of losing his job. “The mortgage-interest deduction is a sacred cow.”
Everyone in Washington, D.C., knows that there are many powerful forces making sure that no one ever suggests getting rid of the mortgage-interest deduction. Jimmy Williams, a former lobbyist for the National Association of Realtors, was one of those forces.
“If I were at the Realtors right now, I’d declare war” on anyone who tried to get rid of the deduction, Williams says.
…
Which of the two presidential candidates is more hawkish?
And are either of them taking America where we want to be?
WORLD NEWS
July 29, 2012, 9:14 a.m. ET
Romney Would Back Israeli Strikes on Iran, Adviser Says
By SARA MURRAY
JERUSALEM—Presidential hopeful Mitt Romney would support Israel if it launched strikes on Iran to halt its nuclear program, a senior campaign adviser said Sunday as he accompanied the candidate on a swing through Israel.
“If Israel has to take action on its own in order to stop Iran from developing that capability the governor would respect that decision,” Dan Senor, a senior foreign-policy adviser to the Romney campaign, told reporters.
…
Romney is desperate to show the country and the world for that matter that he is “tuff” in the image of Bush…His right wing base “demands it”…
This is why young people much prefer Ron Paul over Romney. Romney wants a religious war.
That’s what I fear; realizing that Middle East wars are prophesied, a millenarianist in the WH would see no reason to avoid them.
Your statement doesn’t jive with the polls. Either that, or there are very few young people in the country. While anecdotal, most of the young people I meet (like my kid’s college friends) are for Obama.
I took his point to be that young voters prefer Paul to Romney, if offered a choice between the two.
I’ll buy that for that dollar.
Not so fast says Obama, “we already have a plan to bomb Iran.”
Report: US presents Israel with Iran strike plan
ERUSALEM (AP) — An Israeli newspaper reported Sunday that the Obama administration’s top security official has briefed Israel on U.S. plans for a possible attack on Iran, seeking to reassure it that Washington is prepared to act militarily should diplomacy and sanctions fail to pressure Tehran to abandon its nuclear enrichment program.
“Bomb bomb bomb, bomb bomb Iran…”
Maybe all the hawkish statements are a smokescreen to deal with this perception:
Mitt Romney: A Candidate With a Serious Wimp Problem
Jul 29, 2012 12:00 PM EDT
Dodging reporters, fearing his base, hiding his taxes—is Mitt Romney just too insecure to be president? In Newsweek, Michael Tomasky surveys a history of presidential manliness and asks just where Mitt would fit amid the studly swagger of Dubya and Reagan.
It should be the easiest thing in the world for a presidential nominee: a trip to England. The mother country, the shared tongue, our firmest ally. And it should have been easiest of all last week, happening as it did on the eve of the Olympics. Just praise everything you see. Limn London as one of the world’s great cities, invoke the spirit of the British people that lives on from the glorious days of the blitz. Praise the bangers and mash and the pasties if you have to. Nothing to it.
…
July 29, 2012, 3:25 p.m. EDT
Romney backs away from aide’s Iran-Israel comment
By Andria Cheng, MarketWatch
NEW YORK (MarketWatch) — Republican presidential hopeful Mitt Romney tried to distance himself on Sunday from an aide’s earlier comments that he would respect Israel’s decision if it should decide to use military force to halt Iran’s nuclear program, according to media reports.
“I’ll use my own words and that is I respect the right of Israel to defend itself and we stand with Israel,” the Associated Press quoted Romney as saying, hours after one of his advisers previewed his upcoming foreign policy speech in Jerusalem. “We’re two nations that come together in peace and that want to see Iran being dissuaded from its nuclear folly.”
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Have you bought your lottery tickets yet, in anticipation of the upcoming FOMC meeting announcement?
Wall Street Week Ahead: Rolling out red carpet for central bankers
July 27, 2012 | Jonathan Spicer and Rodrigo Campos | Reuters
NEW YORK (Reuters) - Stocks took off at the end of the week, drawn by the allure of a helping hand from the world’s two most powerful central banks. Traders are unlikely to resist those charms again next week.
The U.S. Federal Reserve and the European Central Bank both meet next week amid investor expectations of action to stimulate economic growth and, in the case of the ECB, tackle the spreading euro zone debt crisis.
The drumbeat of weak economic data and disappointing U.S. corporate profits and outlooks mean central banks can be stocks’ best friends.
Equity prices tend to rise sharply in the hours before a Fed statement like the one expected on Wednesday as traders and investors jockey for position and a chance to make a profit.
Next week’s calendar has a double-whammy. The Fed’s monetary policy statement will come one day before an ECB meeting packed with intrigue. ECB President Mario Draghi said earlier this week the bank was ready to do whatever was necessary, within its mandate, to save the euro.
“People in this business like to get in front of big events, especially if (they) could be very, very positive for the market,” said Brian Reynolds, chief market strategist at agency brokerage Rosenblatt Securities.
In that sense the strategy “is almost like a lottery ticket,” he said.
…
Wall Street bulls seem very confident that recently weak U.S. economic data will lead the Fed to take further action to stimulate the economy.
Hence the FOMC seems to face a simple choice:
1) Clarify that no QE3 or similar stimulus measures are in the works, resulting in an immediate stock market selloff, but serendipitously lower long-term bond rates without any need for QE3.
2) Currently implement QE3 or other stimulus, keeping the rally alive, but possibly also inviting political attack by the Republicans for helping the economy recover on Obama’s watch during a close presidential race.
3) Punting on current stimulus, while leaving the door open for action later on if the economic picture worsens.
Any thoughts on which of doors 1), 2) or 3) will be chosen, and what the likely consequences of 2) or 3) would be? (A stock market crash seems fairly certain if door 1) is chosen.)
This scenario (lay out the QE3 case next week, implement it in September) seems as plausible as any I can imagine. What I can’t imagine is the Fed stiffing Wall Street by indicating that no QE3 is forthcoming.
ft dot com
July 19, 2012 3:34 pm
Talking point: Will the US see QE3 this year?
Ben Bernanke, the chairman of the Federal Reserve, offered few clues about the likelihood of further monetary easing in his testimony to Congress this week – although the stock market’s initial disappointment quickly faded. Just how likely is a third round of quantitative easing (QE3) this year?
Julia Coronado, US chief economist at BNP Paribas, says it appears that Mr Bernanke is very much poised to act.
“He indicated he is watching whether data suggest a sustainable labour market recovery is under way or whether the US economy is ‘stuck in the mud’,” she says. “Since the labour market is a lagging indicator, and we are growing at a pace below trend, the chances are not good that we will return to a pace well above 125,000 on monthly payrolls, which is what is required to bring the unemployment rate down steadily.
“While the chairman continues to stress that ‘monetary policy is not a panacea’, he certainly feels there is still enough leverage in QE policies to help get the economy unstuck again. We thus expect him to lay out where his thinking is on monetary policy at the Jackson Hole symposium at the end of August, and then for the FOMC [Federal Open Market Committee] to initiate QE3 at its September meeting.”
…
Is anything else driving stock prices these days besides the Grand Kabuki dance of economic policy makers in response to the Eurozone debt crisis? It seems all investor ears are trained on the ECB and the Fed for any hint of further stimulus.
July 28, 2012, 12:01 a.m. EDT
Jobs growth, Fed take center stage next week
Earnings season wanes; data to show tepid spending, hiring
By Regina Hing, MarketWatch
NEW YORK (MarketWatch) — U.S. stock investors are likely to focus on jobs, the consumer and central bankers next week, with more tepid readings on the economy raising expectations for extra Federal Reserve stimulus.
A heavy week of data releases, culminating in Friday’s July jobs report, as well as meetings by the Fed, European Central Bank and Bank of England will likely overshadow earnings reports.
…
““People in this business like to get in front of big events,”
What a polite way of saying “insider information”. But it’s still misleading. People in this business MAKE the big events.
“QE3 is coming”
The Trader | SATURDAY, JULY 28, 2012
Stocks Jump 2% on Hopes of QE3, Euro Aid
By VITO J. RACANELLI | MORE ARTICLES BY AUTHOR
Late-week rally ignited by talk of more quantitative easing. Why Caterpillar looks like a buy and P&G doesn’t.
The QE3 hasn’t set sail yet, but investors have begun celebrating at the dock. Stocks rose sharply last week, up about 2%, with the festivities ignited at midweek by reports suggesting that the Federal Reserve is moving closer to launching more quantitative easing to prod the economy.
Additional effervescence came in the form of unusually strong euro-supportive statements from European Central Bank President Mario Draghi, and from the governments of France and Germany.
Market fundamentals, including earnings, are mixed, but hope for stimulus is high now, says Michael Yoshikami, chief executive officer of Destination Wealth Management. “QE3 is coming,” he adds. Indeed, there is a strong dread among institutional investors in particular of being out of the market ahead of such easing moves.
Effectively, the Europeans have said that the euro “is too big to fail,” and Germany’s support of the currency has turned unconditional, he adds.
The Dow Jones Industrial Average finished at 13,075.66, up 2%, or 253 points, on the week. The Standard & Poor’s 500 index rose 1.7%, or 23.31 points, to 1385.97. The Nasdaq Composite tacked on 32.79 points, or 1.1%, to 2958.09, and the Russell 2000 small-cap index added 4.46 points, or 0.56%, to 796.00. Most of the gains came Friday.
…
News Analysis
After Pledge of Help for Euro, Pressure Is On for Bank Chief
By JACK EWING
Published: July 29, 2012
FRANKFURT — Mario Draghi demonstrated last week how a few choice words from a central bank chief can make or break fortunes, even those of whole nations.
Related
Now the president of the European Central Bank faces the much more complicated task of delivering on last week’s promise to do “whatever it takes to preserve the euro.”
He will have a chance to give substance to that bold statement on Thursday when the bank’s governing council meets. With expectations so high, anything short of a decisive display of financial firepower could send financial markets back to the panicky behavior of only a week ago — when the thin trading of summer was exaggerating stock market gloom and bond investors were bidding up the borrowing costs of Spain and Italy to potentially destructive levels.
Mr. Draghi’s vow last week and his assurance that “it will be enough” sent stocks up worldwide and drove Spanish borrowing costs down from their lofty levels. Investors concluded that Mr. Draghi was signaling a major policy action, like huge purchases of government bonds to raise demand for debt from Spain and Italy and keep their borrowing costs at sustainable levels.
His assurances were repeated on Sunday in a statement from Chancellor Angela Merkel and Premier Mario Monti that Germany and Itay would “take all necessary measures to protect the euro zone” — a statement nearly identical to one issued Friday by Ms. Merkel and President François Hollande of France. Controlling the bond market may not be as simple as it sounds, though, even for an institution that has the power to print money. Nor, analysts said, are there many other easy or effective options for the European Central Bank, which serves the 17 European Union nations who use the euro.
Under its current charter, the E.C.B. faces more restrictions on its ability to buy government bonds and stimulate the economy than the Federal Reserve does. While the European bank is supposed to defend price stability above all else and is barred from financing governments, the Fed’s mandate puts more emphasis on promoting employment, and it has bought hundreds of billions of dollars’ worth of Treasury securities.
But even the Fed, whose policy-making committee meets Tuesday and Wednesday, is struggling to find ways to help the economy when its main tool, managing abenchmark interest rate, is close to zero. And the E.C.B.’s benchmark interest rate, which has been cut three times since Mr. Draghi took his post last fall, is at a record low, at 0.75 percent. But in Europe, those low rates have not been passed on to business and consumers in countries like Spain and Italy because their banking systems are dysfunctional.
“They are in regions below 1 percent where the interest rate is basically impotent,” said Jeffrey Bergstrand, a professor of finance at the University of Notre Dame in Indiana and former economist at the Fed. “The only thing that can help is fiscal stimulus,” he said — in other words, government spending by countries like Germany that can afford it.
…
With all the talk of easing, I have a hard time imagining the Fed not delivering.
Thoughts?
ft dot com
July 22, 2012 6:33 pm
Fed looks at third round of easing
By Robin Harding in Washington
The recent slowdown in US economic growth is forcing the Federal Reserve to consider something for which it has always set the bar very high: a third round of quantitative easing.
A decision on whether to launch another round of asset purchases remains in the balance as the central bank wrestles with a complicated economic outlook and uncertainty about the costs and benefits of its easing tools.
In an interview with the Financial Times, John Williams, president of the San Francisco Fed, said that the weak outlook and the extent of downside risks “would argue for further action” but the counter-argument was doubts about tools such as QE3.
However, Fed officials are determined to ensure that the economy makes progress towards lower unemployment. In June, the rate-setting Federal Open Market Committee still forecast a decline in the unemployment rate over the next few years, albeit very slowly. Any downgrade to that forecast would be a likely trigger for further action.
“We are looking very carefully at the economy, trying to judge…whether or not the economy is likely to continue to make progress towards lower unemployment,” said Ben Bernanke, the Fed chairman, in recent testimony to Congress. “If that does not occur, obviously we have to consider additional steps.”
…
Given massive recent withdrawals from US equity funds, what is driving the market skyward?
‘Tis a puzzlement!
ft dot com
July 27, 2012 9:18 pm
US equity funds outflow at a two-year high
By Ajay Makan in London
Investors in the US withdrew $11.5bn from funds that invest in domestic stocks in the week to Thursday, according to data from Lipper, the largest weekly outflow from US equity funds in more than two years.
The S&P 500 – the benchmark US index – is up more than 10 per cent for the year and has stayed in positive territory throughout. It has been a rare bright spot for global equity investors as the crisis in the eurozone and fears of a slowdown in China’s economy have left many other global indices flat or down for the year.
But US investors retreated last week as the Dow Jones Industrial Average, which is closely watched by retail investors, suffered a triple-digit points fall on three consecutive days for the first time this year and concern grew that the Spanish government may ask for a bailout.
Most of the outflows were from exchange traded funds, index-tracking products that offer quick and cheap exposure to stocks and bonds.
Almost $6bn was withdrawn from State Street’s SPY fund, the most popular ETF tracking the S&P 500, the benchmark US equity index.
Tom Roseen, head of research at Lipper, said: “Institutional investors often use SPY when they want to put excess cash to work, so the big outflows from equity ETFs suggest a loss of confidence among institutional investors last week.”
The outflows came before a rally on Thursday and Friday, which saw the S&P 500 record two of its best days of the year, after European Central Bank president Mario Draghi promised to do “whatever it takes” to keep the eurozone intact.
The index was up 3.6 per cent per cent in the two-day period at 1,385.97 and was headed towards its highest level since May.
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Can anyone suggest a scenario under which the Fed DOES NOT go for QE3 by year-end?
All eyes on central banks
By Emily Jane Fox @CNNMoneyInvest July 29, 2012: 9:55 AM ET
NEW YORK (CNNMoney) — After a rally pushed the Dow to close above 13,000 last week, investors will be watching central banks on both sides of the Atlantic this week, as the U.S. Federal Reserve and the European Central Bank will both meet to discuss possible measures to boost the economy.
The Fed will kick off a two-day meeting to start the week, culminating in an announcement on monetary policy Wednesday. At last month’s meeting, the Fed announced plans to extend Operation Twist, the policy of swapping short-term Treasuries in the central bank’s portfolio for bonds with a longer duration.
While analysts don’t expect further quantitative easing or other stimulus out of the Fed this week, investors will be tuned in for any hints of further measures.
“It’s going to be more of the same rhetoric from the last meeting, that they continue to see that the environment is challenging,” said Douglas DePietro, managing director in institutional equities at Evercore Partners. “I don’t expect a different body posture out of them, but everybody’s looking for the next sign of quantitative easing.”
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EUROPE NEWS
Updated July 27, 2012, 7:14 p.m. ET
Germany, France Back Pledge to Save Euro
In Show of Unity, Leaders Throw Weight Behind European Central Bank Chief Draghi’s Vow; the Bundesbank Resists
By BRIAN BLACKSTONE in Frankfurt and CHARLES FORELLE in London
The leaders of Germany and France threw their weight behind European Central Bank President Mario Draghi’s pledge to protect the euro with decisive action, delivering a crucial political endorsement for the ECB’s use of its printing press to buy beleaguered nations’ bonds.
The remarks, from German Chancellor Angela Merkel, French President François Hollande and others, helped propel a broad market rally that began Thursday after Mr. Draghi’s declaration.
Bundesbank chief Weidmann with Chancellor Merkel before a recent cabinet meeting. Ms. Merkel and France’s leader on Friday took a view at odds with the German central bank.
Ms. Merkel and Mr. Hollande held a phone conference Friday and released a statement saying they are “deeply committed” to the euro zone and “determined to do everything to protect it.” In a reference that seemed to endorse Mr. Draghi’s remarks, the leaders said euro-zone member states and European institutions must live up to their responsibilities in their areas of competence.
German Finance Minister Wolfgang Schäuble also signaled his support for Mr. Draghi.
The public display suggests that Mr. Draghi’s comments were part of an orchestrated effort among the region’s key power centers to calm restive markets.
The show of unity came after investors pushed Spanish 10-year bond yields to fresh euro-era highs above 7.5% Wednesday, raising speculation that Madrid may lose access to financing and require a massive international rescue. Italy’s borrowing costs had also soared, reflecting concerns that the debt crisis would spread beyond the capacity of Europe’s anticrisis funds.
However, Mr. Draghi’s remarks set the stage for a showdown with the Bundesbank, Germany’s fiercely independent central bank, which Friday morning repeated its opposition to buying government bonds.
…
“… pledge to protect the euro with decisive action, delivering a crucial political endorsement for the ECB’s use of the printing press to buy belleagured nation’s bonds.”
Their solution regarding protecting the value of the euro is to print more of them, and this solution “… helped propel a broad market rally that began Thursday after Mr. Draghi’s decision.”
Truly the markets are insane.
And then we get: “… euro-zone member states and European institutions must live up to their responsibilities in their areas of competence.”
“… in their areas of competence”
Lol.
“Truly the markets are insane.”
I would argue that the markets are trying to rationally price in the prospects of a Eurozone QE to buy down the yields on Spanish debt. If I had lots of gambling money available, I would buy Spanish debt when yields push above 7%, then sell it when QE announcements knock it back down again.
If lots of big investors are following this strategy, and parking the proceeds of sovereign bond sales into global equity markets, you have yourself the makings of a bear market rally.
Gulf Times — Qatar’s top-selling English daily newspaper - Finance & Business
Latest Update: Sunday 29/7/2012
July, 2012, 01:03 AM Doha Time
Germany’s Roesler warns against ECB bond buying
Roesler: ‘We’ve seen that the Greek government has been unable to implement very much
Reuters, AFP/Berlin
Germany’s Economy Minister Philipp Roesler has warned the European Central Bank against any large-scale government bond purchases, amid market expectations the ECB is poised to buy more Spanish and Italian debt to drive down yields.
Roesler, who is also Germany’s Vice Chancellor and leader of
Chancellor Angela Merkel’s junior coalition partner the Free Democrat Liberals (FDP) told the Neue Osnabruecker Zeitung (OZ) in an interview published yesterday, the ECB had to remain independent.
“Preserving price stability must be the principal role of the ECB and not the financing of state debt. Buying government bonds cannot be a permanent solution. We can only establish new trust in the eurozone if budget discipline is strictly maintained and structural reforms are implemented.”
ECB President Mario Draghi had on Thursday pledged to do whatever was necessary to protect the eurozone from collapse, prompting hopes of an ambitious new programme. Financial markets rallied on the pledge.
The crisis in the eurozone has been thrown into higher gear by a surge in borrowing costs for Spain and by an acknowledgement by Brussels officials that Greece is too far off its targets to be saved by its second bailout package, agreed just five months ago.
Roesler ruffled feathers last weekend when he told a German broadcaster that a Greek eurozone exit was no longer a taboo for experts and had lost “its fear factor.” A party colleague branded his remarks “reckless.”
In his interview with OZ, Roesler dismissed widespread criticism of his stance both from Athens and within his party.
“In my ministry we’ve seen that the Greek government has been unable to implement very much.”
His comments come amid a growing chorus of voices within Merkel’s centre-right coalition that insist there can be no new aid for Greece and that a Greek exit could be imminent.
“Greece cannot be saved, that is simple mathematics,” Michael Fuchs, deputy leader of the parliamentary group of Merkel’s Christian Democrats and their Bavarian sister party told weekly business magazine Wirtschaftswoche.
“The government has neither the will nor the means to implement reforms,” he said.
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Property-tax cheats facing crackdown
Miami Herald | July 28, 2012 | Martha Brannigan
For years — decades, really — Miami-Dade homeowners have been ducking property taxes by illegally claiming homestead exemptions, usually with impunity.
…….The price of getting caught: Up to 10 years of unpaid back taxes, plus a 50 percent penalty and 15 percent annual interest….
Since January, six detectives from the Economic Crimes Bureau of the Miami-Dade Police Department have been working to bolster the muscle of 15 investigators at the Property Appraiser’s Office in nailing violators. That is up from two police detectives deployed in 2011 to tackle a backlog of some 3,500 complaints (now about 2,166) which typically come from tips from neighbors, estranged spouses and others.
This May, Property Appraiser Pedro J. Garcia unveiled a new contract for software and services to flag suspicious claims among the 440,000 homestead properties.
For July alone, the property appraiser, armed with smarter tools, filed $11 million in homestead liens. That compares with $8 million filed for all of 2011.
OPINION
July 27, 2012, 6:36 p.m. ET
Myths and Facts About the Gold Standard
No monetary system can absolve a nation of its fiscal sins.
By JOHN H. COCHRANE
While many people believe the United States should adopt a gold standard to guard against inflation or deflation, and stabilize the economy, there are several reasons why this reform would not work. However, there is a modern adaptation of the gold standard that could achieve a stable price level and avoid the many disruptions brought upon the economy by monetary instability.
Let’s start by clearing up some common misconceptions. Congressman Ron Paul’s attraction to gold, and Federal Reserve Chairman Ben Bernanke’s biggest criticism, is that a gold standard implies an end to monetary policy and the Federal Reserve. It does not.
Under a gold standard, the U.S. Treasury could exchange dollars for gold at a price of, say, $1,000 per ounce. In practice, that means banks would freely exchange their dollar accounts at the Fed for electronic claims to gold.
Nevertheless, the Fed could still buy government debt or other securities in exchange for newly created reserves, lend its reserves to banks, and set interest rates on its loans to banks. A gold standard would not stop the Fed from being the lender of last resort, bank regulator and financial crisis firehouse.
This isn’t theory. It’s history. The Bank of England operated an active monetary policy under a gold standard for two and a half centuries. And the U.S. Federal Reserve was founded under the gold standard in 1914.
Moreover, the history of the gold standard is not just happy centuries of price-level stability. It is also a long history of crises, devaluations, suspensions of convertibility, and defaults on sovereign debt.
Debauching the currency—the great bugaboo of gold-standard champions—will always remain a temptation: If the government promises $1,000 per ounce and a recession comes along, it can say “we need to stimulate. Now it’s $1,100 per ounce.” The success of a gold standard in achieving stable prices depends heavily on its rules and commitments against devaluation—rules honored in the past, until they weren’t.
A gold standard does not eliminate debt crises or debt-induced inflation. No monetary system can absolve a nation of its fiscal sins.
Imagine a government with $15 trillion of debt, $2 trillion of money outstanding, and $2 trillion of gold reserves. Then its debt comes due. If the government can’t raise tax revenues, cut spending, or persuade investors to lend against credible future budget surpluses, it must print $15 trillion of cash not backed by gold, devalue the currency, or default on the debt. Worse, if people see that outcome looming, they will run to change their money for gold ahead of time, causing a crisis as the government’s gold stocks run out.
A successful gold standard needs a clear way to deal with such crises. Here is one plan: Instead of printing unbacked cash, the government lowers the coupon payments on its bonds and notes—similar to the way corporations can cut dividend payments. Of course, this is effectively a gentle “default” in times of stress. But at least a fiscal impasse would not lead to a devaluation of the currency.
Yet if you don’t expect magic, you are not disappointed by its absence. With these warnings, a modern version of the gold standard is attractive.
Why not the old version? Most of all because the value of gold is poorly linked to other prices in the economy, which is what we want to stabilize. Fixing the price of gold today would do little to control the general price level. There are two big reasons for the disconnection between gold and other prices.
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I think this person misunderstands what the gold standard (or at least as used by Ron Paul) means. You can’t change the conversion rate from 1000 to 1100, the note you are carrying (again, with the gold standard) has a fixed conversion rate (one note = one oz of gold, as a simplistic example). Think of it like dollars and pennies. You can always, regardless of inflation, exchange 1 dollar for 100 pennies. If that one dollar could always be exchanged for 1oz of gold, that would be the gold standard.
I agree with the last statement, gold prices are volatile, and I’m not sure that making 1 dollar = 1oz would do much to ensure price stability in this country. The thing it would do, though, is prevent inflation. You can’t inflate the currency unless you get more gold (so you can print more dollars). So, you wind up with a much more measured growth of the currency, to inflate the currency you have to build mines and mine more gold, that’s a tall order compared to a Bernake waking up tomorrow and deciding that the presses need to run doubletime to chuck another trillion or so into the economy.
The gold standard is much more about inflation prevention than it is about price stability; I’d argue that prices would be LESS stable on a gold standard because, in general, the price of gold fluctuates more than the price of the dollar.
“You can’t change the conversion rate from 1000 to 1100, the note you are carrying (again, with the gold standard) has a fixed conversion rate (one note = one oz of gold, as a simplistic example).”
Fixed conversion rates between gold and fiat currencies were made to be broken.
The Gold Standard and the Great Depression: Echoes
By Philip Scranton Dec 12, 2011 12:38 PM PT
In September 1931, Britain abandoned the gold standard, at least for the next six months. This followed Germany’s decision in mid-July of that year to establish strict exchange controls, a response to serious foreign-account liquidations and demands for gold shipments in early summer.
What was this gold standard and why was it under pressure in 1931?
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“… in general, the price of gold fluctuates more than the price of the dollar.”
So which of the two makes a greater store of value?
“… in general, the price of gold fluctuates more than the price of the dollar.”
I have a hard time making sense of that statement. Since the price of gold is denominated in dollars, isn’t the gold price in dollars the reciprocal of the dollar priced in gold?
Perhaps a benchmark of wages would suffice. Does the value of gold measured in wages fluctuate more widely than the value of dollars as measured in wages?
If you want to use the argument that the long-term trend of gold more closely tracks the long-term trend of wages than does the dollar then I will agree with you. But I am not addressing the long-term trend of either; I am addressing the fluctuations of both within the long-term trend.
“So which of the two makes a greater store of value?”
The answer is easy if you want to talk about which made the best store of value over the past forty years. The price of gold forty years ago was $35/ounce; now it is $1,627/ounce. The dollar’s loss of value in gold terms was hence
(35/1627-1)*100 = -98%.
The reciprocal statement is that if you had bought an ounce of gold forty years ago for $35 and held on to sell today, your nominal gain in dollars would have been
(1627/35-1)*100 = 4549%.
The question for would-be gold buyers now is whether this phenomenal rate of return on gold is sustainable, or is gold in a bubble?
One more thing: If your primary concern is to park some money in an asset class which will maintain its value, even if governments collapse, then gold is clearly an excellent choice. Just don’t expect it to produce outside returns over the next few decades unless major developed-nation economy governments really do collapse.
Gold probably seemed like an excellent choice in 1980, too, at $850/ounce. This is equivalent to $2367.19/ounce in today’s dollars, so the 1980 buyer is still underwater by 31%. The fellow who invested in stocks in 1980 has done a bit better, with a 1580% nominal gain, or 570% real gain.
The fellow who invested in stocks in 1980 has done a bit better, with a 1580% nominal gain, or 570% real gain.
Considering that he pays capital gains taxes on the phantom _nominal_ gain, what is his tax-adjusted real gain?
In what sense, exactly was the price of gold $35/oz when it was illegal for American to own gold?
Just because the price of a commodity is $35/ounce does not imply that it is universally available for sale to anyone who wants some. A related example is loans: When the Fed instituted its ZIRP policy, did you personally succeed in obtaining a loan at a zero percent interest rate (aka the price of loanable funds)?
What Was The Gold Standard?
The Gold Standard vs. Fiat Money
From Mike Moffatt, former About.com Guide
…
A Very Brief History of the Gold Standard
If you would like to learn about the history of money in detail, there is an excellent site called A Comparative Chronology of Money which details the important places and dates in monetary history. During most of the 1800s the United States was had a bimetallic system of money, however it was essentially on a gold standard as very little silver was traded. A true gold standard came to fruition in 1900 with the passage of the Gold Standard Act. The gold standard effectively came to an end in 1933 when President Franklin D. Roosevelt outlawed private gold ownership (except for the purposes of jewelery). The Bretton Woods System, enacted in 1946 created a system of fixed exchange rates that allowed governments to sell their gold to the United States treasury at the price of $35/ounce. “The Bretton Woods system ended on August 15, 1971, when President Richard Nixon ended trading of gold at the fixed price of $35/ounce. At that point for the first time in history, formal links between the major world currencies and real commodities were severed“. The gold standard has not been used in any major economy since that time.
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Gold is sold in dollars. I would argue that it’s the fluctuation in dollars that makes gold look unstable.
“I think this person misunderstands what the gold standard (or at least as used by Ron Paul) means.”
I’m duly impressed that you are more knowledgable about finance than the professor who wrote this tome, which once helped me survive a graduate course in the subject:
Asset Pricing
John H. Cochrane (Author)
Winner of the prestigious Paul A. Samuelson Award for scholarly writing on lifelong financial security, John Cochrane’s Asset Pricing now appears in a revised edition that unifies and brings the science of asset pricing up to date for advanced students and professionals. Cochrane traces the pricing of all assets back to a single idea–price equals expected discounted payoff–that captures the macro-economic risks underlying each security’s value. By using a single, stochastic discount factor rather than a separate set of tricks for each asset class, Cochrane builds a unified account of modern asset pricing. He presents applications to stocks, bonds, and options. Each model–consumption based, CAPM, multifactor, term structure, and option pricing–is derived as a different specification of the discounted factor.
Even Sandy Weill Has Rejected Megabanks. Why Won’t Mitt Romney?
By Eliot Spitzer
Posted Thursday, July 26, 2012, at 4:20 PM ET
Mitt Romney
Why hasn’t Mitt Romney rejected megabanks?
Photograph by Oli Scarff/Getty Images.
So Former Citigroup CEO Sandy Weill, the father of two horrendous ideas (megabanks and financial deregulation), has come around, acknowledging that the premise of his repeal-Glass-Steagall ideology is wrong. Even Weill now says: Break up the banks because it will make the financial system safer and the economy sounder.
But before we all start waxing poetic and singing his praises, we should remember that most clear-thinking economists, and even many bankers, had come to this conclusion long before Weill did—including John Reed, Weill’s former co-CEO at Citigroup; Philip Purcell, the former CEO of Morgan Stanley; and Richard Fisher, the president of the Dallas Fed. But at least Weill finally got it right, even if he is still to blame for one of the most damaging policy shifts in our economic history.
Here are a couple of crucial lessons we should all agree on: The so-called synergy that Weill and others claimed would result from merging commercial banking and investment banking often ended up being little more than the triumph of fraud and avarice over truth-telling and fiduciary duty. The notion of self-regulation is a pure canard. It is no more than a license to steal and a cover for corruption.
But what to make of the few who remain steadfast in their dedication to the broken system of self-regulation and big banks? Like Mitt Romney, whose only answer to reforming financial services is to repeal Dodd-Frank and then let the chips fall where they may?
It is hard not to conclude that when it comes to financial services, Mitt Romney is about where he is on most other matters: wandering aimlessly, doing little more than repeating the disastrous mantras of the past. He has shown not a moment of originality, independence, reflection, or leadership in this entire campaign. Instead, his is a spineless voice for tired, failed answers that are now even rejected by his former friends. Isn’t he feeling a little lonely out there?
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Not only would the banks be far more valuable if broken up into pieces, but they would also be far less able to commit crimes against ordinary American citizens at cost of mere wrist-slap penalties: Smaller, less powerful banks would no longer be too-big-to-regulate.
AL’S EMPORIUM
July 28, 2012, 9:44 p.m. ET
A Shattering Reversal
By AL LEWIS
It will take time to get over the shock of Sandy Weill, father of the too-big-to-fail bank, going on CNBC last week and saying we should break up too-big-to-fail banks.
This is like the ghost of Jim Jones emerging from the jungle and saying, “I wish all those people didn’t drink my Kool-Aid.”
It’s like that black-and-white film clip of J. Robert Oppenheimer, father of the atomic bomb, darkly and remorsefully reading a Hindu scripture: “I am become death, the destroyer of worlds.”
Mr. Weill, 79, has gone down in history as a destroyer, too.
He stepped down as chairman of Citigroup in 2006 and still made Time magazine’s Top 25 list of people to blame for the 2008 financial crisis, right up there with Bernie Madoff.
Time published this list in February 2009, yet its words ring painfully true today as banks deliver one mind-blowing debacle after the next—including Barclay’s settlement for manipulating interest rates and J.P. Morgan Chase’s billions in surprise trading losses.
“The swollen banks are now one of the country’s major economic problems,” Time wrote, “leading the government to spend hundreds of billions of dollars to keep them afloat. The biggest problem bank is Weill’s Citigroup.”
Mr. Weill has mostly blamed his successors for the wreckage.
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Mr. Weill’s legacy? “Our world hates bankers,” he told CNBC.
If he wanted to make a more honest observation he’d flip the nouns: “Bankers hate our world.” Bankers’ misanthropy knows no bounds. Save them from their own folly with a taxpayer bailout, and they will raise their fees and foreclose on homes without proper due process.
So now we’re down to Mr. Weill’s money. He has finally recognized what the market is screaming: These banks would be more valuable in pieces.
Perhaps “The Shatterer of Glass-Steagall” will live on to bag more loot being the shatterer of banks.
—Al Lewis is a columnist for Dow Jones Newswires in Denver. He blogs at tellittoal.com; his email address is al.lewis@dowjones.com
Mitt Romney is about where he is on most other matters: wandering aimlessly, doing little more than repeating the disastrous mantras of the past. He has shown not a moment of originality, independence, reflection, or leadership in this entire campaign.
There it is.
I’m very encouraged by recent developments on the effort to end too-big-to-fail. Now if we could only find a presidential candidate who would stand up for the right side of history, instead of prostituting him- or herself to Megabank, Inc in exchange for gazillions in advertising dollars…
July 26, 2012, 5:00 am
A Fed Governor Wants Tougher Rules
By SIMON JOHNSON
Simon Johnson is the Ronald A. Kurtz Professor of Entrepreneurship at the M.I.T. Sloan School of Management and co-author of “White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.”
A powerful new voice for financial reform emerged this week – Sarah Bloom Raskin, a governor of the Federal Reserve System. In a speech on Tuesday, she laid out a clear and compelling vision for why the financial system should focus on providing old-fashioned but essential intermediation between savers and borrowers in the nonfinancial sector.
Sarah Bloom Raskin, a governor of the of the Federal Reserve, says she opposes new banking regulations because they are not tough enough.Joshua Roberts/Bloomberg News Sarah Bloom Raskin, a governor of the of the Federal Reserve, says she opposes new banking regulations because they are not tough enough.
Sadly, she also explained that she is a dissenting voice within the Board of Governors on an essential piece of financial reform, the Volcker Rule. Her colleagues, according to Ms. Raskin, supported a proposed rule that is weaker, i.e., more favorable to the banks; she voted against it in October.
At least on this dimension, financial reform is not fully on track.
Two years after the passage of the landmark Dodd-Frank financial reform legislation, you might imagine that the crucial detailed regulations would already be in place.
But, not so, at least with regard to the Volcker Rule, which is intended to limit the ability of big banks to make large “proprietary” bets. (Proprietary trading is jargon for speculation – betting on asset prices going up and down.)
The basic idea of this is simple and completely compelling. Paul A. Volcker, the former chairman of the Federal Reserve System, has stressed that this measure will help us move away from an arrangement in which the people who run big banks get the upside when they are lucky – and the rest of us are stuck with some enormous, awful bill when things go awry.
Senators Jeff Merkley, Democrat of Oregon, and Carl Levin, Democrat of Michigan, fought long and hard to get meaningful provisions into the legislation. But these still need to be turned into regulations that must be followed.
The final Volcker Rule was due out last week but did not appear. The current expectation is that it will appear at some point in August. (The Fed is one of five regulators involved in setting the Volcker Rule; the others are the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Securities and Exchange Commission.)
As Ms. Raskin explained in her speech, “I view proprietary trading as an activity of low or no real economic value that should not be part of any banking model that has an implicit government backstop.”
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Somebody gets it.
INVESTING
July 28, 2012, 9:16 p.m. ET
Stocks Continue to Defy Investors’ Sour Mood
By TOM LAURICELLA
Amid a fresh barrage of bad economic news, the mood among investors these days is glum. So it might come as a surprise that stocks are actually up so far this year.
Stocks had swooned during the spring amid yet another flare-up of worries about Europe, with the Dow Jones Industrial Average losing 820 points in May alone.
But since then, the Dow has rebounded almost 700 points. Crucial to the bounce has been expectations that the Federal Reserve will move quickly should the U.S. economy deteriorate further.
As a result, even after a couple of white-knuckle days last week, the Standard & Poor’s 500-stock index is up 10% so far this year.
The Dow has struggled a bit more, gaining 7% so far in 2012, but the technology-heavy Nasdaq is up a hefty 14%.
While that’s good news for many portfolios, investors shouldn’t get complacent. There are considerable risks both in the U.S. and abroad that could quickly send the still-jittery markets into a tailspin.
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TIP OF THE WEEK
July 28, 2012, 9:20 p.m. ET
Using Plastic May Cost You
By RACHEL LOUISE ENSIGN
It may be getting a little more expensive to swipe that credit card.
Merchants, including Payless ShoeSource and convenience-store operator CHS, settled a class-action lawsuit against credit-card firms Visa and MasterCard, with the two card companies agreeing to nix their rule prohibiting merchants from charging customers a fee for making a purchase with a credit card, according to documents of the pending settlement.
That means some consumers could start paying extra for using plastic, fees that ostensibly would go to cover what the card issuers charge merchants.
But the fees may not become widespread, say credit-card industry experts. And don’t expect to see them any time soon, as there are still things to be worked out, says Madeline Aufseeser, senior analyst at research firm Aite Group specializing in credit and debit cards. Also, retailers Wal-Mart Stores and Target are advocating against the terms of the settlement.
Any fees would likely be a percentage of the purchase price, and generally could be as much as what card issuers charge merchants—typically between 1% and 3% of the purchase amount, according to a 2009 report from the Government Accountability Office.
The fees won’t go into effect in the 10 states that prohibit credit-card surcharges—including New York, California and Texas. What’s more, the change only applies to credit cards. So if you use a debit card, even with the “credit option,” the fees won’t apply, says Ms. Aufseeser.
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Inventory manipulation seems to be working very well to keep prices artificially inflated, at a cost of low transactions volume.
KENNETH HARNEY NATION’S HOUSING
DEARTH OF HOMES FOR SALE CREATING SELLERS’ MARKET, FOR A CHANGE
By Union-Tribune
12:01 a.m., July 29, 2012
Updated 6:09 p.m. , July 27, 2012
Also of interest
HOMES FOR SALE IN COUNTY PLUMMET
CANCELED CONTRACTS, SETTLEMENT DELAYS ARE ON THE RISE
Housing prices in county rise, but sales down
February housing prices rebound
Home sales end 4-month rise
Though many home shoppers who assume they are still in a buyer’s market find it hard to believe, one of the sobering fundamentals shaping real estate this summer is shrinking inventory: The supply of houses for sale is down significantly in most areas compared with a year ago. And that is having important side impacts — raising prices and homeowners’ equity stakes, and reducing total sales.
In major metropolitan markets nationwide, the stock of homes listed for purchase is down by sometimes extraordinary amounts — 50 percent or more below year-ago levels in several areas of California, according to industry studies (53 percent in San Diego). In Washington, D.C., and its nearby suburbs, listings are down by 28 percent, reports Redfin, an online realty brokerage. In Los Angeles, available inventory is 49 percent lower than it was last summer. In Seattle, listings are off by 41 percent. According to the National Association of Realtors, total houses listed for sale across the country in June were 24 percent lower than a year earlier. The dearth of listings is often more intense in the lower- to mid-price ranges, less so in the upper brackets.
Peggy James, an agent with Erick & Co. of Exit Choice Realty in Prince William County, Va., says she gets calls “all the time” from buyers asking, “Where are all the new listings? Are you agents bluffing” — holding back? But the reality is that “there just haven’t been many” listings in some high-demand price categories lately, she says.
In Orange, Carlos Herrera, broker-owner of Casa Blanca Realtors, says “it’s really strange right now. We have many buyers but few sellers,” forcing purchasers to bid up prices on what’s available.
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Inventory in San Diego doesn’t feel down. There was a period of 5 years when nothing in the entire county was in my price range. I’ve got lots of real estate options today.
My understanding is that “inventory” refers to the number of homes on the market, without considering the distribution of prices or affordability.
A quick check on Redfin confirms there are but 5,380 homes, condos and townhouses, including MLS-listed homes and foreclosures plus for-sale-by-owner homes, currently on the market for San Diego County, an area with a population of 3 million or so, at the height of the red-hot summer sales season.
I don’t follow the local market that closely these days, as I am not looking for a place, but I recall seeing the inventory over twenty thousand at points over the past several years.
You’re right about inventory not considering the distribution. Absolute inventory isn’t a relevant measure without that. If all the listings are over a million dollars it doesn’t matter if there is 1 or 10,000 or 100,000. (IIRC that was nearly the case when inventory was 20,000.)
I’m trying to find some pretty charts for us about months of supply or something, but most of these charts only go out 1 year. After a decade of excess I’m gonna need more than 1 year of data.
I suspect that the current (and short term) situation is “bullish”… and then prices go “up”… everyone lists… it’s a buyers market again…etc.
The significance of this story is that the Grexit question has even come to the attention of the normally provincial UT-San Diego.
UT EconoMeter
EconoMeter: Boot Greece out of the eurozone?
Issue is what’s better for Greece, Europe and the world economy
Written by Roger Showley
5:09 p.m., July 26, 2012
Updated 8:51 a.m. , July 28, 2012
Also of interest
SHOULD EUROPE SIMPLY GIVE UP ON GREECE AND LET IT LEAVE THE EUROZONE?
EconoMeter: Will there be a run on Greek banks?
ECONOMETERISTS ON ‘GREXIT’ AND EURO BANK RUNS DO YOU EXPECT A RUN ON BANKS IN GREECE OR OTHER EUROPEAN COUNTRIES IN THE NEXT SIX MONTHS?
EconoMeter weighs Greek impact on U.S.
Greeks vote in critical election
Q: Should Europe simply give up on debt-ridden Greece and let it leave the eurozone?
Panel’s answer: Yes 4, No 3
Lenders Extend Stay in Greece to Work Out Latest Cuts
By NIKI KITSANTONIS
Published: July 29, 2012
ATHENS — Envoys for Greece’s international lenders have extended their mission to Athens indefinitely, a Finance Ministry official said Sunday, and now plan to stay “as long as necessary” to help government leaders complete a “credible package” of budget savings.
The so-called troika of lenders — the European Commission, European Central Bank and the International Monetary Fund — have extended to Greece two loan deals worth €240 billion, or $295.7 billion at the current exchange rate, over the past two years but have expressed frustration at the Greek authorities’ slow implementation of overhauls they had promised to make in return for the aid.
The leaders of Greece’s fragile coalition government met last week to try to finalize measures to achieve €11.5 billion in budget savings for 2013 and 2014 but failed to reach an agreement. The officials were set to meet again Monday to decide on the package, which is necessary for Greece to continue receiving future installments of aid from the troika. Reluctant to impose more cuts on citizens weary after more than two years of austerity, Greek officials are seeking to avoid further reductions to pensions and social benefits, but there appear to be few alternatives.
The I.M.F.’s envoy to Athens, Poul M. Thomsen, told the Greek finance minister, Yannis Stournaras during a dinner Friday night that “we want to help, and we will stay as long as it takes to prepare the package,” said the Finance Ministry official, who was not authorized to comment publicly on talks that were continuing.
…
A reader sent me this:
‘A few days ago, 275 foreclosure houses across metro Phoenix were purchased through a very quiet $34 million cash deal. But it’s not clear yet who the buyer is.’
‘In February, Fannie Mae announced it would auction 2,490 foreclosure homes in Phoenix, Atlanta, Chicago, Florida, Los Angeles and Las Vegas. It was the first time the government-owned mortgage firm agreed to openly sell groups of foreclosure houses located in just one metro area. Since the crash, Fannie Mae and Freddie Mac usually have sold homes they get back from lenders one by one, or in bulk with houses located all over the country.’
http://www.azcentral.com/business/realestate/articles/20120727mystery-buyer-snaps-up-foreclosure-homes.html#ixzz221a3f6GJ
Sounds like F&F are creating special off-market deals for bulk investors, who can dribble inventory onto the market very slowly “until prices come back”?
I wonder, did they get good stuff or crappy stuff? At $120k each, I wonder if they were sorted for turnkey rental quality? Are some of Darrells 45k condos in the mix?
Hard reality for San Diego’s underemployed
Three from the ranks of part time or overqualified struggle to gain footing during tough times
Matt West, 24, works six nights a week as a valet in downtown San Diego despite having a bachelor’s degree from the University of San Diego. — K.C. Alfred
Written by Jonathan Horn
2 p.m., July 28, 2012
Deborah Seracini spends two days each week making sure shelves of Coppertone Sunscreen are in order at five Walmart stores in the South Bay and a Rite-Aid in Coronado.
The $12-per-hour job probably isn’t what she envisioned nearly 20 years ago when she earned her master’s degree from the University of San Diego.
“I’m not going to feel degraded or anything like that,” Seracini, 56, said before beginning a recent shift. “I want to do something more meaningful. I want to do something that’s good for the world, for the Earth, it’s just busy work at this point, and I’m glad I have it, or I’d go stir-crazy.”
Her current job’s nothing like the one she had until last July. That’s when she was laid off as a full-time acquisitions editor for a publishing company. She’s since been looking for new full-time work but has only had a few interviews.
Seracini is symbolic of a workforce whose members have taken jobs for which they are well overqualified. That’s why the unemployment rate, near a three-year low at 9.2 in San Diego County, doesn’t tell the whole jobs story. Seracini would be counted as employed, but really, she’s underemployed.
She’s one of nearly 8.2 million Americans who were working part time in June for economic reasons, such as not being able to find full-time work. That’s nearly double the 4.33 million in that situation in October 2007, according to seasonally adjusted data from the U.S. Bureau of Labor Statistics.
The jobs don’t usually pay all the bills, especially when trying to support a family.
…
Matt West, 24, works six nights a week as a valet in downtown San Diego despite having a bachelor’s degree from the University of San Diego
Ah, my alma mater, where if you pay full freight it costs 40K a year. When I graduated in in 1985 it cost $6000. And I had a full tuition scholarship, which are much harder to get these days.
West, who came to USD from Oregon, played three years of football for the Toreros.
So that’s how he paid for it. And now he’s parking cars. So much for USD’s “West Coast Ivy” status.
USD was a west coast ivy? Here I thought it was just another expensive Catholic school named after a city.
Yup, that’s what we alumni were told when the fundraising hat was being passed around. Personally, I thought that it was a load of bunk. USD’s law school is supposed to be pretty good though.
Stanford, Berkeley, and…USD?
Ho-kaaay.
“The jobs don’t usually pay all the bills, especially when trying to support a family.”
This has been coastal California’s problem for years caused by asset inflation and easy lending (dollar debasement) policies.
Delving into why California has such a disproportionate share of the nation’s recipients, does it make the state WELFARE CAPITAL OF THE U.S.?
Written by Michael Gardner
12:01 a.m., July 29, 2012
Updated 8:52 p.m. , July 27, 2012
Also of interest
Is California the welfare capital?
STATE BEGINS WELFARE CHANGES
State begins slow process of limiting welfare
GOVERNOR SIGNS $92 BILLION BUDGET
Governor signs state budget
Sacramento — When Gov. Jerry Brown and the Legislature overhauled the state’s welfare program last month, some people learned a jarring fact for the first time: California has one-third of the nation’s welfare recipients.
That California has a lot of people on welfare was not a secret. In addition to its size, the state has a long history of heavy focus on social services, in part because of years of Democratic dominance in Sacramento.
But the size of California’s welfare rolls is disproportionate when you consider the state has only 12 percent of the nation’s population. Some of it has to do with the benefits being more generous than in many other states, but experts also point to various economic and social factors.
There’s more to support the notion that this is the welfare state. California:
• Pays out one of the highest maximum monthly cash grants to the average family on welfare, $638.
• Continues aid for children even when the parents lose eligibility.
• Provides benefits even to some who find a job and helps with child care and transportation while attending school or training.
On the flip side, California is not the land of endless “Cadillac” benefits:
• The actual average cash grant for the typical family of three is $463.
• Welfare payments have been cut twice since 2009 while 18 states have provided nominal increases.
• The high cost of housing eats up more of the aid than in other states with smaller grants.
…
I would add in nice weather in many parts of the state.
“I would add in nice weather in many parts of the state.”
+1 Certainly those in need deserve nice weather regardless of cost!
AKA the “sunshine” dollars, which unfortunately are not accepted as legal tender by any merchants.
Good for whoever bought the 275 houses. And good for the auctioning of 2,490 homes. More houses for rent means rent prices will continue to be bargains. Rentals are going to flood the market. A significant number of Phoenix POS houses have been bought and turned into rentals.
Mobility is a virtue.
Downward pressure on rents works well for us, too…
Don’t be so sure. Some people on this blog have asserted that rents mostly go up.
There tends to be a tendency among a fair number of posters to ignore economic fundamentals, such as how a glut of rentals on the market puts downward pressure on prices.
There tends to be a tendency among a fair number of posters to ignore economic fundamentals
I fully agree on the fundamentals. But I would also state that on an anecdotal level (e.g. just scanning craigslist listings), I am not seeing rents go down in Seattle. In fact, the data seems to suggest the opposite. Of course, I have no good data on how much inventory is in the rental pipeline, or when it might actually be released.
Yeaaaaaaaaaaaaaup!
Do you have tuberculosis?
No, but I did stay at a Hoiliday Inn last night.
State sends TB patients to $35-a-night Jacksonville motel
Posted: 1:00 a.m. Sunday, July 29, 2012
By Pat Beall
Palm Beach Post Staff Writer
JACKSONVILLE —
The low-rent coral and green motel on the outskirts of downtown doesn’t look like a haven for tuberculosis patients.
But for at least two years, TB patients were routed by Duval County health officials to the Monterey Motel and told to stay put.
Longtime motel resident Alfred Scott — who was treated for the lung disease more than 20 years ago — said he and other residents only were told of the TB patients when they saw people wearing masks coming and going on the motel walkways.
“I stayed away,” he said.
Patients remained at the motel until they no longer were contagious, state Department of Health spokeswoman Jessica Hammonds said.
http://www.palmbeachpost.com/news/news/state-regional/state-sends-tb-patients-to-35-a-night-jacksonville/nP57g/ -
I find it amazing that people who lend money want it repaid and in full - and this is a major news items.
The free sh*t army finds this to be surprising.
—————————————–
Second-lien holders put drag on short sales
San Francisco Chronicle | July 28, 2012 | Gopal and John Gittelsohn
……..Facing an onslaught of pending foreclosures, banks increasingly are turning to short sales. They lose about 15 percent less on short sales than they do on repossessions, which can take years to complete while taxes accumulate along with legal, maintenance and other costs, according to Moody’s Investors Service. To encourage short sales, banks are streamlining the closing process, forgoing their right to pursue unpaid debt, and giving some homeowners cash incentives of as much as $35,000 for relocation expenses.
Roadblocks involving second liens are standing in the way of even more short sales, which reached the highest number in three years in the first quarter-133,192 total transactions, said Daren Blomquist, vicepresident at RealtyTrac. While about 39 percent of homes that have entered the foreclosure process have more than one lien, just 4.2 percent of short sales completed in the second quarter-5,658 transactions-were on homes with second mortgages, according to an analysis RealtyTrac performed for Bloomberg.
“It appears that short sales with multiple liens aren’t happening as frequently and are taking longer to complete,” said Blomquist, adding that when a short sale doesn’t go through, the home often ends up in foreclosure.
…The four largest U.S. banks-JPMorgan Chase, Bank of America, Citigroup and Wells Fargo-held 48 percent of the $849.5 billion in second liens as of March 31, according to the newsletter Inside Mortgage Finance. Some banks sell second mortgages to outside investors such as Franklin Credit Management for anywhere from a quarter of a cent to 60 cents on the dollar…
….While Franklin’s Axon declines to say how much his company collects on the loans it buys, he said it averages more than the industry standard of 6 percent of the unpaid balance. His company focuses collection efforts on younger, more educated borrowers, he said….
The four largest U.S. banks-JPMorgan Chase, Bank of America, Citigroup and Wells Fargo-held 48 percent of the $849.5 billion in second liens as of March 31
Considering that most of these second-liens are of zero value, would this be a fair estimate of future losses that the big banks have not yet realized?
48 percent times $849.5 billion = $407.76 billion
Good one, though I suspect you underestimate the potential for Megabank, Inc to find some poor schlepps (perhaps even American taxpayers) on whom to offload those toxic second lien assets before the losses are realized.
Those loans were never secured to start with.
It’s interesting how this blog has developed from housing to larger subject of politics and economics. Let me respond to the below comment posted yesterday. Yes there are problems but there still is ample opportunity especially for young people. As I have noted and others (I think Overtaxed and maybe Diogenes?) US 1950s life style / income was a historical / economic anomoly. Your daughters and granddaughters will not have a nice comfortable life being a clock puncher for 30 years somewhere. But they can start a business and have a very nice life. THey’ll have to work hard / risk a lot. IT could take decades. There will be ups and downs. But that’s the price and throughout most of history has been. People from all over the world still want to come to the US. Have neighbors who just bought a $600K house cash. (Note I live in a rental.) They came here fifteen years ago penniless. They have two small restaruants. Work about 15 hrs a day seven days a week. No fancy car, no vacations several times a year, no extravangt spending, etc. Now that they have a home they are saving for retirement and for their kid’s college. Though he admits that the kids going to college is more like a social right of passage than a means to a finacailly secure living. Times change people have to adjust to the new circumstances or rather the reverting to normal circumstances.
Comment by X-GSfixr
2012-07-28 10:03:43
Better to be a rich, freaky old grandma looking dude, than be me.
I’ll bet they don’t worry about a bleak future for themselves, their kids and their grandkids.
I’m basically screwed. So are a lot of people like me, they just don’t know it yet. They watch Fox News too much.
All three of my daughters (and my granddaughter) are screwed. They will be caught in the crossfire between the rioting/stealing/murdering wretched refuse, and the top 10%ers, who will be able to afford the personal security services needed when the government money to pay the cops runs out.
The oldest is starting to suspect it. I don’t have the heart to tell the other two. All three are stocking up on guns and ammo, for the coming “Zombie Apocalypse”.
“It’s interesting how this blog has developed from housing to larger subject of politics and economics.”
It’s been this way for years already.
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
Bits Bucket for July 29, 2012
Post off-topic ideas, links, and Craigslist finds here.
Perhaps what has developed is the growing recognition of how the housing bubble is but one symptom of the interplay between present-day central bank intervention policy (aka “too big to fail”) and investor expectations. Back when this blog started out, we used to have trolls come on here to insist that there was no connection between Wall Street and the housing market. Nobody would bother to assert something so preposterous at this stage of the game.
But yet, they are still pushing the “all it takes is hard work” fable.
If that were true, Mexican illegals would be running the country.
Id like to see how much money your friends would make, if we all decided to get into the restaurant business.
And how much of their money/business was based on illegal workers?
Guess your daughters and granddaughters are screwed if they share attitude.
Their future was borrowed out from under them before they were even born. Sure, some will make it, but most of them won’t. The pie got a lot smaller, and there are a lot more people wanting a slice.
Meanwhile the old people pat themselves on the back about how awesome they were in their youth, and demand free medical care and monthly checks be taken from the meager earnings of the young.
Nationwide, the restaurant/bar business had an industry exemption to min wage.
It’s not just illegals.
SNARP
Supplemental Nutrition Affordable Refinance Program
We have SNAP and we have HARP, both programs must take a lot of people to run. So I`m gonna help President Obama out since he was going to go through the federal budget line by line, I`ll just go between these two lines and combine them. I come up with SNARP. Get your late house payments made, a brand new 150 year loan and your groceries for free in a one stop shop.
Supplemental Nutrition Assistance Program (SNAP)
We put healthy food on the table for more than 46 million people each month. Fighting SNAP Fraud (Not to mention SNARP fraud)
Americans support helping struggling families put food on the table, but they also want to know taxpayer dollars are spent wisely. (the tax payer money spent wisely but the borrowed and printed money is thrown to the wind) is FNS’ proactive strategies protect the Federal investment in SNAP and ensure that the program is targeted towards individuals and families who need it the most. Learn the facts and help us Fight SNAP Fraud.
Report Suspicious Activity: (800) 424-9121
———————————————————————————-
Home Affordable Refinance Program (HARP)
http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx/ - 89k - Cached -
http://www.fns.usda.gov/snap/ - 30k -
SNARP.
Dang, that’s just excellent, Unk. Government sponsored loans to finance your Sunday dinner. Why, they could even have bank branches in the grocery stores! Oh. Wait….
SNARP
LOL!!! Awesome one, jeff!
from today’s nytimes about an old spanish couple. I would love to see a detailed examination /comparison of mortgagee experiences (foreclosed, underwater) in different countries.
<they are supporting their unemployed 48-year-old daughter and two of her unemployed adult sons who now live with them in their tiny two-bedroom home here in northern Spain. Sometimes there is hardly money for food.=”">
Really interesting morning at Chuck E. Cheese. It was a party for three kids, and all of the kids are either going into VPK or K in a month.
So… naturally, the “where’s your kid going” conversation starts. Long story short: my wife and I seem to be the only people that thought about schools before making a house decision.
Many of the people that rushed to buy a house 5-7 years ago now find themselves in unfavorable scenarios and are stressing out over where their kids are zoned. We have a good plan in place, and we will move next year if we don’t get into the application school we want.
It’s beyond me how people put buying a house in front of their kiddos’ educayshun.
“…my wife and I seem to be the only people that thought about schools before making a house decision.”
What sort of a ‘hood do you guys live in? We see something of the flip side of that foolishness in our area — families who home school their kids, even though they pay a hefty housing premium for access to high quality public education.
LOL………my buddy is in the same position. Bought a house for too much money in 2010, in an excellent public school district.
Not good enough for wifey. She insists on spending $14k a year on Catholic school.
14K? Dang! Our local K-8 parochial charges 3K per kid.
“What sort of a ‘hood do you guys live in?”
Pinellas County is the oddest place I have ever lived. You can pretty much guarantee that in every neighborhood there’s a crackhead, nice old couple from Indiana, a d-bag from NY, a nice guy from NY, a d-bag from Florida, a nice guy from Florida, rich, poor, middle class, section 8, maybe a pop-star’s winter home, etc.
So… my ‘hood is like that. A few druggies, an NFL rookie, a family from Ohio, my crazy old-guy neighbor from Cuba, a little old lady that lives alone.
To answer your question: the housing is a mix that ranges from wooden 800 sq. ft. crapshacks to 8,000 sq. ft. Gulf-front mansions. School-wise, we’re in a better pattern, but I expect high academics, so we’ll probably move next year.
And no, Alpha, you can’t move here.
How many sloths per neighborhood?
LOL…
“So… my ‘hood is like that. A few druggies, an NFL rookie, a family from Ohio, my crazy old-guy neighbor from Cuba, a little old lady that lives alone.”
Bad Bad Leroy Brown lyrics
Songwriters: Jim Croce
Well the South side of Pinellas
Is the baddest part of town
And if you go down there
You better just beware of a man named Muggy Brown
Now Muggy , more than trouble
You see he stand ’bout six foot four
All the downtown ladies call him Treetop Teacher
All the men just call him Sir
And it’s bad, bad Muggy Brown
The baddest man in the whole damned town
Badder than old King Kong
And meaner than a junkyard dog
Now Muggy , he a renter
And he buys his own kids clothes
And he like to wave his bills marked paid
In front of everybody’s nose
He got a nice 3 bedroom rental
He got an Education too
He got a 5 year old son and his weekends in the sun
He got a cell phone in his shoe
And it’s bad, bad Muggy Brown
The baddest man in the whole damned town
Badder than old King Kong
And meaner than a junkyard dog
Well, Friday ’bout a week ago
Muggy lookin’ twice
And at the end of da street
was a house in foreclosure
and ooh, that house looked nice
Well, he cast his eyes upon it
And the trouble soon began
‘Cause Muggy Brown learned a lesson
‘Bout a messin’ with the house of a Deadbeat man
Well, the two men took to fighting
And when they pulled them from the floor
Muggy saw the house in foreclosure
It had all the aplliances gone
And it’s bad, bad Muggy Brown
The baddest man in the whole damned town
Badder than old King Kong
And meaner than a junkyard dog
Yeah, badder than old King Kong
And meaner than a junkyard dog
jeff, you’ve got a gift, man!
Thanks for bringing a grin to our faces late in the day!!!
It was nice of Cheney to take care of this issue for Romney.
Cheney Says McCain Made ‘Mistake’ Picking Sarah Palin
By Greg Giroux on July 29, 2012
Former Vice President Dick Cheney said it was “a mistake” for Arizona Senator John McCain to pick Sarah Palin as his vice-presidential running mate in 2008.
Cheney headed George W. Bush’s vice-presidential search in 2000 before becoming Bush’s running mate. Of the Republican selection process four years ago that led to Palin, he said, “That one I don’t think was well-handled.”
Palin hadn’t “passed that test” of readiness to serve as president because her political experience was limited, Cheney said in an interview with ABC News. The television network showed portions of Cheney’s remarks today on its “This Week” program. The full interview is to air July 30.
Cheney, 71, said demographic and political factors in the selection process “are important issues, but they should never be allowed to override that first proposition” of being ready to serve as president.
“I think that was one of the problems McCain had,” Cheney said.
Palin was “an attractive candidate” but the fact that she’d served as Alaska governor for less than two years raised questions about her “being ready to take over” as president, Cheney said.
“I think that was a mistake,” he said.
Cheney said that it was “pretty important” that Republican presidential candidate Mitt Romney handle his selection process differently. Romney is expected to announce his running mate before the party’s national convention Aug. 27- 30 in Tampa, Florida.
…
I personally don’t believe that the modern American president has much decision making power due to excessive cronyism and lobbying. The only possibility of change would come from a successful former military general who is popular with the public and has a large following of disciplined officers garnered during his ascent. For this reason we’ll likely never see another popular general like Eisenhower gaining much traction without being noticed by the cronies working for the defense secretary.
Cheney’s a mistake himself.
Yet another vacant Hollywood mansion? Say it ain’t so!
Robert Pattinson ‘moves out of LA love nest’
Robert Pattinson moves out of house he shared with girlfriend Kristen Stewart
They think it’s haul over … hire van leaves love nest
By BELLA BATTLE
Published: Today at 14:28
ROBERT Pattinson has reportedly moved out of the luxury love nest he shared with cheating Kristen Stewart.
Both a U-Haul truck and a bigger lorry were snapped leaving the Los Angeles property - just days after photos of Kristen, 22, kissing married director Rupert Sanders appeared in a US magazine.
The heartbroken Twilight star, 26, is said to have removed his belongings - including larger furniture - shortly before Kristen followed suit, and the £3.8million mansion now lies empty.
…
and the £3.8million mansion now lies empty.
Sounds like an awesome squat…
“ROBERT Pattinson has reportedly moved out of the luxury love nest he shared with cheating Kristen Stewart.”
One fantasy and Pattinson folds?
Late response to yesterday’s thread:
Comment by Prime_Is_Contained
2012-07-29 12:13:12
It’s not rocket science, folks: Low interest rates result in skyrocketing pension liabilities, coupled with paltry investment returns on pension assets.
Well said; but what is the timeframe in which the pension fund crisis will become visible to all? My guess is that the date is far enough down the road that they simply don’t care at this point.
The rolling domino of related crises continues…
“… but what is the timeframe in which the pension fund crisis will become visible to all?”
Do you mean to suggest it’s not already visible to all, or just that the exacerbating effect of the Fed’s ultralow rate policy hasn’t yet been widely recognized?
Of course whoever penned the article posted below most likely has no clue that adopting realistic investment return assumptions for the CalPERS pension fund would reveal a crushingly underfunded accrued pension liability, which would feed Republican calls for more public pension cuts.
Our View: CalPERS needs reality check
July 27, 2012 09:28:43 PM
A common defense of California’s giant public employee pension systems against calls for bold and expedient reforms is that the funds’ investments are performing “just fine” and that, once the economy turns around, the funds will be able to pay the retirement benefits promised to their members, and there will be nothing to worry about. A recent disclosure by the California Public Employees Retirement System about its investments should refute such assurances.
CalPERS, which projects a 7.5 percent annual return on investments, earned only 1 percent for 2011-12, according to the fund itself and analysis by Orange County Register Watchdog reporters. This is the fifth time in five years CalPERS has failed to reach its investment return goal.
What that means is that state unfunded pension liabilities will grow, again. One highly cited Stanford University study estimates California’s unfunded pension liability at up to a half-trillion dollars.
Central to clearly assessing the risk is the all-too-rosy investment return projections made by CalPERS.
Leaders of the giant pension fund point out that their investments have averaged gains of 7.73 percent the past 20 years.
As the Watchdog pointed out, however, over the past 5 years the overall return has been 0.1 percent. For CalPERS to continue assuming high returns not only is imprudent financial planning, but obscures the level of risk from state government and the taxpayers.
This latest report should serve as a wake-up call to Gov. Jerry Brown and the Democratic-controlled state Legislature about the need to invest some political capital in fixing the state’s public pension systems, even if it means angering the public-sector unions that wield so much power in the Capitol. Delaying perhaps painful reforms will only exacerbate the problem, and simply hoping that the economy will miraculously turn around anytime soon and backfill pension shortfalls is a delusion.
…
“As the Watchdog pointed out, however, over the past 5 years the overall return has been 0.1 percent.”
I’m willing to guess a lot of HBB posters have beat CalPERS’ returns by a wide margin, by avoiding real estate investments like the plague?
The pension fund crisis started back in the 1990s. Hence the push for 401ks/Roth/IRAs and was one of the motivating factors in the bankruptcy “reform” laws in 2005 as well as the increase in popularity of derivatives.
2 samples
http://www.hedgefundprofiler.com/Documents/96.pdf (2003)
http://www.leftbusinessobserver.com/Pensions.html (1994)
Google: pension fund crisis. Use the extra search tools on the left (custom range: time) and plug in dates from approx 1998 to 2005.
“The pension fund crisis started back in the 1990s.”
I know. I was working in the field when the crisis was gathering force.
Unfortunately, it never really ended…
“Cheney headed George W. Bush’s vice-presidential search in 2000 before becoming Bush’s running mate.”
I’m amazed at how few people are aware of this fact. Being reminded of it always makes me smile. My intense dislike for him aside, you have to stand in awe of the way he operates.
Romney-Cheney 2012?
If he were really such an operator, he would have tried to run for president afterward, age and health be damned.
“If he were really such an operator, he would have tried to run for president afterward, age and health be damned.”
That’s not how he figures he can get the most done. Practical man.
Bush Sr., Cheney, Rumsfield and Rove all worked together back in the 1970s and have been ever since.
For those of you who pooh-pooh conspiracies and especially ones over long periods of times, here is no better example of their reality.
For those of you who pooh-pooh conspiracies and especially ones over long periods of times, here is no better example of their reality.
I don’t see how having worked together in the past, and thus knowing each other well and having a trust relationship makes their continuing to work together in the future some kind of conspiracy. If anything, that is normal, typical behavior. People frequently work with people from their past again in the future.
“People frequently work with people from their past again in the future.”
True. Let’s just say that if conspiracies go on, Cheney’s hands are all in.
con·spir·a·cy
[kuhn-spir-uh-see] Show IPA
noun, plural con·spir·a·cies.
1.
the act of conspiring.
2.
an evil, unlawful, treacherous, or surreptitious plan formulated in secret by two or more persons; plot.
3.
a combination of persons for a secret, unlawful, or evil purpose: He joined the conspiracy to overthrow the government.
4.
Law . an agreement by two or more persons to commit a crime, fraud, or other wrongful act.
5.
any concurrence in action; combination in bringing about a given result.
The last 30 years has brought us: S&L disaster, offshoring of jobs, deregulation in the FIRE sector resulting in massive fraud and theft, the Wall St. due to all of the above, declines in wages and many other fun hardships for the avg person to the benefit of the oligarchs, most of which were promoted by the neocons and their various lobbyists/think tanks/”foundations”, with those four at the center of it all.
Yeah, no conspiracy here. Nope. NO sireee!
Im thinking about changing my name, thanks to Bill in LA-LA.
Since I believe that we donlt need to turn the clock back to 1913, I guess this makes me…………”Redistributionist Commie Thug”
Otoh, this is better than “Parasitic Libertarian”
Go ahead and change your name. But you are the thug.
This smacks of “I know you are, but what am I?”
Can we please elevate the conversation above the third-grade level?
You tell that to me but not to XG-S Breaker. That says a lot.
Let us know when you find a country where you don’t have to pay taxes or conform to the local social standards.
It has to exist! St. Ayn Rand says so!
They’ve got a gulch somewhere.
Have you hugged your thug today?
Righteous B Store — Hug a Thug Hat
http://righteousb.bigcartel.com/product/hug-a-thug-hat - 6k - Cached - Similar pages
Have you hugged your thug today? … Hug a Thug Hat. Image of Hug a Thug Hat · 1 · 2. Previous. Next. $15.00.
Since I believe that we donlt need to turn the clock back to 1913, I guess this makes me…………”Redistributionist Commie Thug”
Aw, I wanted to use that! Now I’ll have to settle for “Pinko Parasite”
Markets
Obama or Romney: Who’s Best for the Markets?
As the election nears, Wall Street is making bets on whether President Obama or challenger Mitt Romney will be best for the stock market. Mark Hulbert discusses on Markets Hub. Photo: Reuters.
7/26/2012 11:02:10 AM
Skittles McHoodie? nice Irish name
Global equity markets are trying to price in QE3 as quickly as possible. The Global DOW is rocketing skyward as I type.
Stories like this really chew my face. Well, no more “Mr. Nice Guy”
Posted: 5:32 p.m. Saturday, July 28, 2012
Some neighbors wary of three arrested on charges of making, distributing synthetic marijuana
By Cynthia Roldan and Alexandra Seltzer
Palm Beach Post Staff Writer
WEST PALM BEACH —
The warehouse on Georgia Avenue blended in with its neighborhood until you looked close. Its windows were tinted to prevent anyone from peeking inside. Wary neighbors occasionally glanced at those who rented the property, only to be met with stares that made them turn away. Then all the proof they needed drowned out their whispers.
BOOM.
The warehouse was on fire. Thick clouds of smoke clogged the air. Flames were visible from blocks away. Scores of packets of “Mr. Nice Guy” — a widely available brand of synthetic marijuana — littered the ground.
http://www.palmbeachpost.com/news/news/local/some-neighbors-wary-of-three-arrested-on-charges-o/nP57L/ - -
“synthetic marijuana”?
Man, I AM out of touch with pop culture these days. Had to look it up.
Oh: “…the only synthetic marijuana on the market is called Marinol, which is synthetic delta 9-THC.”
Well that’s bogus!
Not THC at all(no it is not marinol); it’s research chemicals such as JWH-018(and other names as they tweak the formula to stay ahead of bans that get put in place). Commonly known as “Spice”; is super potent compared to MJ; does not show up on drug tests; and is usually sprayed on random smokable herbs and sold at gas stations and head shops(you know, next to the bath salts). It works; so I have heard! Great for that pot-head with a job who gets drug tested randomly.
Some people have freaked out on it as it is super-duper potent depending on the “blend”. Never tried it BTW; normal pot alone would make me freak out….save it for the face eating guinea pigs.
You have to be kinda nuts to volunteer your body as a laboratory guinea-pig for some random maybe-not-so-qualified research chemist, in that you will happily smoke up whatever they decide to brew in a batch?
If they are constantly “tweaking” the formula (probably while they are tweaking on some substance), there is no telling what you are getting.
My preference is not to take anything into my body that the human race hasn’t been ingesting for 100yrs or so; that gives us a reasonable amount of time to figure out what harms/kills you, and what doesn’t.
Smoking something that has been around a matter of days? WTF.
My understanding is that no one has ever died of a MJ overdose. The same will not be said of this stuff…
Interest rates are falling.
How long will it take for rates fall by another 50%? The difference in interest payments to the bank that you will never recover is stunning.
If you borrow $200k now, you’ll pay a whopping $125,000 in interest alone. If you wait while rates crater, you’ll pay $57,000.
Not to mention that prices are falling and you’ll pay far less in principal later if you wait.
Spent most of the weekend reviewing auction schedules and driving to a few potential homes that don’t flag modification to come. Come Jan 2013 most of the auctions homes will dry up in Ca.
Most homemoaners are kicking the can down the road to get grandfathered in the new Ca HomeMoaners Bill Of Rights.
The cheap smaller homes are what the flippers seem to bid on. One lady spent $800K Friday morning at the auction. She’s a heavy hitter for sure. I saw her there last time we went as well. Must be nice. I think she flips and isn’t the LL type. Once the bidding hit $240K most bidder/flipper/a-hole personalities walked. (There are soooo many arrogant “capitalist” there.) Calling themselves capitalists is a misuse of the word, imho. Those people aren’t my “flavor”.
FHA’s Mortgage Delinquencies Soar
http://money.cnn.com/2012/07/09/real_estate/housing-delinquencies/index.htm
Since the FHA doesn’t already have a high enough delinquency rate, they are pushing for still looser lending standards.
NATION’S HOUSING
AGENCIES PUSHING LENDERS TO EASE RULES
By Union-Tribune
12:01 a.m., July 8, 2012
Updated 6:05 p.m. , July 6, 2012
Two federal agencies with far-reaching influence over the mortgage market are working on a problem that could affect the ability of many consumers to obtain a home loan: How to encourage private lenders to ease up on their underwriting restrictions that go beyond what the agencies themselves require for mortgage approvals.
Both the Federal Housing Finance Agency, which oversees giant investors Fannie Mae and Freddie Mac, and the Federal Housing Administration, which runs the low-down-payment FHA program, are considering steps they might take to persuade lenders to open the mortgage spigots a little wider. Together, Fannie, Freddie and FHA account for 90 percent-plus of all home loan funding. The focus of their little-publicized reform projects: the “overlay” rules many lenders have adopted that lump extra fees, larger down payments and higher credit-score requirements onto home loans than Fannie, Freddie or FHA actually require.
…
Since the FHA doesn’t already have a high enough delinquency rate, they are pushing for still looser lending standards.
Funny that they would be unhappy about receiving higher-quality paper than they required, huh?
May FHA Roundup: Seriously Delinquent Loans Up 23.2% From Last Year
By Michael Kraus on July 10, 2012
Recently the FHA released its Single Family Outlook for May 2012. There’s quite a bit of good information in the report, none of which really constitutes a stand-alone blog post, so this is more of a round-up of some of the various FHA data points (it’s a pretty slow news day).
Currently the FHA has approximately 7.6 million loans, with a total balance of $1.1 trillion.
FHA applications increased by 4.5% from May 2011 to May 2012, mostly likely as a result of record low mortgage rates as well as the continued tight credit conditions that make it difficult for many people to obtain a loan through traditional sources.
Despite the year-over-year increase, FHA applications dipped by more than 20% from April to May.
There was a steep drop in FHA refinances from April to May. Refinances were down by over 44%. Much of this is a result of investors curtailing FHA streamlines. Many investors are now restricting streamline refinancing to loans they originated or loans where they already own the servicing rights.
FHA endorsements increased by 4.6% from April 2012 to May 2012, again this is likely the result of the current low rate environment.
The average FICO score of an FHA borrower over the past four months is 699. The average FICO score for those refinancing has hit record highs the past four months (708, 710, 712, and 711).
The serious delinquency rate (90+ days delinquent) on FHA loans stayed the same from April to May, at 9.4%. The number of seriously delinquent loans is up considerably (23.2%) from last year.
Despite the continued high delinquency rate, the number of single family claims paid out is down from last year 21.4% from the same period last year.
The FHA Short Refinance program continues to be a bust. There were 204 short refis applications in May, down from 249 in April. Only 107 short refinances were actually completed in May.
I do question the forward viability of the FHA (without a bailout) given the increase in the seriously delinquent loan rate.
….
Sounds like lots of central bank shock and awe will be on display next week. Should work great for Wall Street!
Draghi on Offensive as Game Changer Sought in Crisis Battle
By Patrick Donahue - Jul 29, 2012 8:31 PM PT
European Central Bank President Mario Draghi has gone on the offensive as he seeks a game changer in the battle against the sovereign debt crisis.
Draghi, who sparked a global market rally last week by pledging to do whatever it takes to preserve the euro, is trying to build consensus among governments and central bankers for a plan to ease borrowing costs in Spain and Italy before ECB policy makers convene on Aug. 2. He meets with U.S. Treasury Secretary Timothy Geithner in Frankfurt today and is also attempting to win over Bundesbank President Jens Weidmann, a critic of ECB bond purchases.
Berlin, Paris and Rome have already endorsed Draghi’s approach, echoing his language in saying they will do what’s needed to protect the 17-nation euro. Draghi must now deliver or face a renewed selloff on bond markets, where soaring Spanish and Italian yields have fueled speculation that the monetary union could fall apart.
Draghi “put his personal credibility on the line” and “would not have done so without being confident about his key constituency,” Erik Nielsen, global chief economist at UniCredit Bank AG in London, wrote in a note to clients yesterday. “The ECB under Draghi does not like to mess around in the market, but if it sees a need, it will come with overwhelming force.”
…
Where are 2banana and Smithers hiding out this weekend? I would like to hear a report from them about how the trip to London has worked for their candidate.
ft dot com
July 29, 2012 7:58 pm
Why the UK was right on Romney
Edward Luce
Thank goodness for Mitt Romney that Britain is not America’s 51st state. It would long since have joined New York in the solid Democratic column. “Who invited him?” asked the Daily Mail last week, following Mr Romney’s string of gaffes about the Olympics.
The Washington commentariat is fond of disparaging Fleet Street – usually with good reason. In terms of intrusion, iniquity and, on occasions, pure invention, the UK tabloids are Olympic gold medallists. But the UK media has a reasonable track record at detecting bluff. One example was its scepticism about the reasons for invading Iraq, a stance that often set the British press at odds with their more patriotic US counterparts.
Another is Mr Romney’s awfulness as a candidate. It has nothing to do with insight: the UK media are only stating bluntly what is on everyone’s minds. Headlines like “Mitt the Twit” showcase how irreverent British tabloids can be. Yet they present in caricature what many Republicans are happy to volunteer in private. But then the Republican “establishment” long since resigned themselves to the trials a Romney nomination would entail.
Six long years after he first emerged as presidential candidate, time is fast slipping away for Mr Romney to define himself favourably. At a moment when the US debate should be dominated by a weakening economy, Barack Obama’s campaign keeps shifting attention back to Mr Romney’s mangled biography. When the president needs a day off, Mr Romney is usually happy to step in his shoes.
Last Friday, US growth was reported at 1.5 per cent for the second quarter, well below the first quarter’s 2 per cent. Happily for the White House the latest bad numbers coincided with Mr Romney’s less than stellar London visit. It follows weeks of focus on Mr Romney’s reluctance to talk frankly about his past at Bain Capital (let alone turn that experience to his advantage), or to release more than two years of his tax returns.
Since he has not yet addressed either of those issues – and may never do so – they promise to drive many more news cycles yet. With 99 days to go before the election, does Mr Romney have the time or ability to turn things around? The technical answer is yes. Elections can be upended in the final weeks. At a later stage than this in the 1988 campaign, George H.W. Bush was trailing Michael Dukakis by double digits. But in Mr Romney’s case a big surge seems highly improbable.
The more worrying answer from a Republican point of view is that things could actually get a lot worse. The polls, which show the two candidates in a dead heat, flatter the Romney campaign. With unemployment above 8 per cent – it may even rise when the July payroll numbers come out on Friday – and growth again slowing, an incumbent president would ordinarily be headed for defeat. The fact that Mr Obama is still favourite, if only by a whisker, offers an extraordinary rebuke to Mr Romney’s campaigning skills.
…
Where are 2banana and Smithers hiding out this weekend?
They don’t work weekends?
Last Friday, US growth was reported at 1.5 per cent for the second quarter, well below the first quarter’s 2 per cent.
And no one bothered to report that 1.5% growth in a 1.5% inflation environment is actually zero growth. It’s just that the metric that we report the GDP with (e.g. dollars) has changed.
Zero growth, people. Four years after the crisis “ended”.
All signs point to more near-term central bank stimulus to come. Look for the perverse combinations of rising stock prices and a never-ending string of dismal economic data releases as a consequence.
Japan Industrial Output Falls as Korea Confidence Sinks: Economy
By Keiko Ujikane - Jul 29, 2012 7:55 PM PT
Japan’s industrial production unexpectedly declined and South Korean manufacturers’ confidence dropped to a three-year low, building the case for extra monetary and fiscal measures to aid growth.
Production fell 0.1 percent in June from May, when it slid 3.4 percent, Japan’s Trade Ministry said today. The median estimate of 29 economists surveyed by Bloomberg News was for a 1.5 percent gain. The South Korean confidence index for August was at 70 after 81 for July, the central bank said.
The signs of weakness kick off a week that UBS AG says will be among the year’s most important for financial markets, with the U.S. Federal Reserve and central banks in the U.K. and the euro region meeting to consider fresh stimulus efforts. The Reserve Bank of India will release its monetary policy decision tomorrow as it weighs inflation risks against the weakest economic growth since 2003.
“It’s increasingly likely that the Fed and European Central Bank will ease further by September,” said Masamichi Adachi, a senior economist at JPMorgan Securities in Tokyo and a former central bank official. In Japan, the government may implement a supplementary budget by September, with the central bank expanding asset purchases, Adachi said.
Today’s Korean data followed a slide in a measure of the nation’s consumer confidence.
South Korean Finance Minister Bahk Jae Wan said the economy is in a “difficult” situation. “I will do everything I can to find a solution for the sluggish domestic economy,” Bahk said today in a speech to government officials in Gwacheon.
…
A large share of U.S. city bankruptcies since 2010 occurred in California, over the past two months.
Bankrupt Cities and Municipalities Map
Many local governments across the U.S. face steep budget deficits as they struggle to pay off debts accumulated over years. As a last resort, some have filed for bankruptcy.
Governing is tracking the issue, and will update this page as more municipalities seek bankruptcy protection.
In June, Stockton, Calif., became the largest U.S. city to file for bankruptcy. San Bernardino, Calif., was the most recent city to approve a bankruptcy filing after City Council members learned the city had only $150,000 left in its bank accounts.
Central Falls, R.I., and Jefferson County, Ala., both filed for bankruptcy in 2011. Harrisburg, Pa., and Boise County, Idaho, also filed for bankruptcy, but their claims were rejected.
The majority of Chapter 9 bankruptcy filings have been submitted by utility authorities, special districts and other taxing entities. In Omaha, Neb., eight Sanitary and Improvement Districts have filed for bankruptcy since 2010.
Bankruptcy Filing Totals Since 2010
All Municipal Bankruptcy Filings: 26
City and Locality Bankruptcy Filings: 6
Expected Local Government Filings: 1 (City of San Bernardino)
Municipal Bankruptcies Map
The map below shows all municipalities filing for Chapter 9 bankruptcy protection since 2010, along with local governments voting to approve a bankruptcy filing.
Cities, towns and counties are shown in red. Utility authorities and other municipalities are displayed in gray. Click a marker to view details of each filing. Please note that several municipal bankruptcy filings have been rejected, as indicated.
I didn’t see Vallejo, CA in there.
“Smells Like Teen Spirit” or something else.
Load up your loans and bring your friends
It’s fun to lose and to pretend
We`re four years late but self-assured
Oh no, I know a dirty word
We owe, we owe, we owe, we owe?
We owe, we owe, we owe, we owe?
We owe, we owe, we owe, we owe?
We owe, we owe, we owe
With the lights out, make our payments
Here we are now, make our payments
Don`t be stupid stupid it`s contagious
Here we are now, make our payments
We owe, we owe, we owe, we owe?
We owe, we owe, we owe, we owe?
We owe, we owe, we owe, we owe?
We owe, we owe, we owe
And I forget just what I paid
Oh yeah, I guess it makes me smile
I found it hard, it’s hard to find
Oh well, whatever, nevermind
We owe, we owe, we owe, we owe?
We owe, we owe, we owe, we owe?
We owe, we owe, we owe, we owe?
We owe, we owe, we owe
With the lights out, make our payments
Here we are now, make our payments
Don`t be stupid stupid it`s contagious
Here we are now, make our payments
A denial!
A denial!
A denial!
A denial!
A denial!
A denial!
Nirvana - Smells Like Teen Spirit (lyrics) - YouTube
http://www.youtube.com/watch?v=zYxkezUr8MQ - 171k -
Deserves a repost on a new day.